rfX.     .■' 


UC-NRLF 


B    M    bfl3   ^27 


fAXATION 


IN 


NEW  YORK  STATE 


BIDWELL 


J 


TAXATION 


IN 


NEW  YORK  STATE 


BY 

FREDERICK  DAVID  BIDWELL 
ALBANY,  NEW  YORK 


ALBANY 

J.  B,  LYON  COMPANY,  PRINTERS 

1918 


\\' 


•^ 


-5>^ 


Entered  according  to  Act  of  Congress  in  year  191 8  by 

FREDERICK  DAVID  BIDWELL 

In  the  office  of  the  Librarian  of  Congress,  at  Washington,  D.  C. 


TAXATION    IN    NEW  YORK    STATE 


CHAPTER  I 
COLONIAL  TAXATION 

Taxation  in  New  York  is  unintelligible  unless  it  is 
correlated  with  the  revenues  and  expenditures  of  the 
government.  A  study  of  the  revenue  system  in  this 
State  from  the  earliest  days,  when  it  was  a  Dutch 
colony,  downi  to  the  present  time  discloses  how  much, 
and  at  times,  all  the  revenue  was  derived  from 
indirect  sources. 

As  the  Dutch  colony,  New  Netherland,  the  colonial 
revenue  was  nearly  exclusively  derived  from  two 
sources,  from  duties  and  from  excise.  In  1650,  accord- 
ing to  Secretary  Cornelius  Van  Tienhoven,  the  revenue 
of  the  colony  was  derived  from  an  eight  per  cent  export 
duty  on  beaver  skins;  an  excise  on  beer  of  $1.20  (three 
guilders)  per  tun,  which  was  first  imposed  in  1644; 
and  an  excise  on  wine  of  two  cents  (one  stiver)  per 
can,  which  was  first  imposed  in  1647. 

In  looking  to  their  mother  country  for  models  of 
tax  forms  to  introduce  into  their  American  posses- 
sions the  Dutch  settlers  found  numerous  types  of 
indirect  taxes  to  choose  from,  but  no  tax  that  bore  any 
resemblance  to  a  general  property  tax.  Every  form 
of  indirect  taxes  had  been  developed  by  the  Dutch 
to  carry  on  their  war  of  independence.  The  importa- 
tion and  consumption  of  wine,  beer  and  liquor  was 
heavily  taxed  after  about  1580.  Also  many  articles 
of  luxury  as  well  as  necessity  were  taxed  either  by  an 
import  or  an  excise  duty.  Direct  taxes  did  not  play 
an  important  role  in  Holland  during  this  period. 

[8] 


4''cc  i''l  yl'r,c  \' .;  Taction  in  New  York 

The  State  government  by  raising  most  of  its 
revenues  to-day  thru  indirect  taxes  is  going  back  to 
the  custom  existing  here  during  the  Dutch  occupancy. 
According  to  the  custom  in  Holland  the  revenues  of 
New  Amsterdam  were  farmed  out.  Thus  the  burgher 
and  tapper  excise  was  farmed  out  to  the  highest  bid- 
der at  public  auction.  The  burgher  excise  on  liquors 
w^as  granted  the  city  magistrates  in  1654.  It  appears 
to  have  been  a  tax  on  liquors  bought  directly  from 
the  maker  or  wholesale  dealer  for  private  use,  as  dis- 
tinguished from  the  tax  on  liquors  handled  by  taj)- 
sters.  The  rate  was  twenty  stivers  per  tun  of  strong 
beer,  six  stivers  per  tun  of  small  beer,  and  thirty 
stivers  per  anker  of  wine  or  distilled  liquor.  In  1659 
the  city  excise  brought  in  $1,400  (3510  guilders).  The 
city  slaughter  house  was  another  source  of  revenue. 
In'l656  this  brought  in  $280  (710  Carolus  guilders), 
;  the  farmer  who  paid  this  sum,  receiving  in  return 
five  per  cent  of  the  value  of  all  slaughtered  cattle. 
All  persons  slaughtering  oxen,  cows,  calves  and  sheep 
for  private  consmnption  were  to  give  notice  to  the 
slaughter  house  fanner,  procure  a  permit  from  him 
and  pay  him  his  legal  fee. 

The   city   chest   of   New  Amsterdam   remained   so 

chronically  empty  that  the  city  magistrates  were  often 

driven  tobeg  the  Dutch  West  India  Company  for 

their  salaries.     Fees  of  notaries,  secretaries,  clerks 

and  similar  officials,  were  in  1658  fixed  by  law.    There 

were  dues  for  marking  measures  and  barrels,  wharf- 

I  age  charges  and  special  taxes  of  uniform  amount  on 

I  each  household,  for  the  rudimentary  fire  protection 

and  night  watch.    A  fine  of  $10.00  (25  guilders)  was 

imposed  for  neglect  to  sweep  a  chimney  in  case  it 

i  caught  fire.    Court  fines  were  to  be  divided,  one-third 

I  to  the  city,  one-third  to  the  officer,  one-sixth  to  the 

church  and  one-sixth  to  the  poor.     There  was  a  fine 

for  tardiness  and  absence  from  the  meeting  of  the 

schout,  burgomeisters  and  schepens. 


Colonial.  Taxation  5 

A   more    efficient   fire    protection   was    undertaken 
between  1657   and  1658.     Unpaid  fire  wardens   had 
long  existed,  Avhose  duties  it  was  to  inspect  fireplaces 
and  chimneys.     It  was  now  determined  to  purchase 
fire  ladders,  hooks  and  buckets.     For  defraying  the 
original  cost  of  these  a  tax  of  one  beaver  or  eight 
florins  was  levied.     The  city  was  also  authorized  to 
collect  annually,  for  maintaining  the  apparatus,  one  i 
florin    for    each    chimney.  .   In    1661    the    honest    city 
fathers  called  the  attention  of  Peter  Stuyvesant,  the. 
director  general  of  the  colony,  to  the  inequality  of  this] 
tax,  since  the  rich  often  had  several  fireplaces  con-| 
nected  with  one  chimney,  and  the  amount  was  accord- 
ingly ordered  to  be  levied  upon  each  fireplace.     It 
was  also  provided  that  tenants  of  houses  might  deduct 
half  of  this  tax  from  the  rent  paid  to  the  owner. 

The  city  treasury  derived  a  considerable  smn  of 
money  annually  from  the  sale  of  the  ''  groote  borger- 
recht  "  and  *'  kligne  "  or  ''  porterrecht  ".  As  early 
as  1648  complaints  were  made  by  the  resident  mer- 
chants of  New  Amsterdam  that  they  were  much  har- 
rassed  by  the  competition  of  itinerant  merchants, 
coming  especially  from  New  England  and  settling 
only  for  a  short  time  in  the  town.  In  order  to  put  a 
stop  to  this  sort  of  competition  foreign  traders  were 
compelled  to  set  up  and  maintain  an  open  store  in 
New  Amsterdam,  and  to  procure  from  the  authorities 
the  lesser  right  of  citizenship,  known  as  the  "  kligne  " 
or  "  porterrecht  ",  to  enable  them  to  trade  in  the 
town.  This  cost  $8.00  or  twenty  guilders.  By  paying 
$20.00  or  fifty  guilders  the  greater  right  of  citizenship, 
known  as  the  ''  groote  borgerrecht  ",  could  be  pro- 
cured. This  qualified  the  holder  for  any  city  office 
and  among  other  privileges  gave  him  freedom  from 
arrest  by  a  subaltern  officer.  Two  hundred  and  nine 
persons  bought  the  lesser  right  of  citizenship,  and 
twenty  the  greater  right  of  citizenship  within  two 
months  after  the  publication  of  this  law. 


6  Taxation  in  New  York 

The  vast  importance  of  the  present  system  of 
municipal  docks  makes  the  establishment  of  the  first 
city  wharf  of  special  interest.  The  first  city  wharf 
Iwas  established  in  1658.  The  new  dock  appears  to 
'have  adjoined  the  great  bridge  across  the  Heere 
Gracht  or  Grand  Canal.  The  city  was  allowed  to 
collect  eight  stivers  per  last  (about  two  tons)  for 
loading  or  unloading  from  this  wharf  or  dock.  The 
burgomeister  and  schepens  petitioned  also  repeatedly 
for  the  revenue  from  the  ferry  to  Brooklyn,  then 
farmed  by  the  West  India  Company,  but  it  Avas  not 
until  the  English  period  that  this  was  conceded  to  the 
city.  This  right,  so  long  coveted,  appears  to  have 
been  secured  soon  after  the  English  capture;  at  any 
rate,  a  municipal  ordinance  regulating  its  manage- 
ment appears  at  that  time,  and  in  1682  an  offer  was 
made  to  the  city  council  from  William  Merritt  of  £20 
a  year  for  twenty  years  for  the  privilege  of  maintain- 
ing it.  The  ferry  soon  became  the  chief  source  of 
municipal  revenue. 

Another  reason  why  property  taxes  did  not  play  an 
important  role  in  the  early  history  of  the  Dutch  colony 
was  that  New  Netherland  was  primarily  a  trade  and 
not  an  agricultural  colony.  This  is  showTi  by  the  char- 
acter of  the  West  India  Company.  The  first  emigrants 
in  1623  hastened  to  make  treaties  with  the  Indians  and 
engage  in  the  profitable  fur  trade.  As  long  as  the 
colonists  were  traders  at  New  Amsterdam  or  Bever- 
wyck,  or  were  scattered  along  the  river,  their  pos- 
sessions consisted  almost  entirely  of  movalile  goods, 
so  a  property  tax  would  have  been  difficult  to  intro- 
duce. After  the  curtailment  of  the  privileges  of  the 
West  India  Company  and  of  the  Patroons,  agricul- 
tural village  communities  sprang  up.  But  the  colony's 
revenue  in  the  early  days  came  almost  exclusively 
from  indirect  sources. 

Interesting  to  note  is  that  many  of  the  early  Dutch 
villages  in  New  Netherland  held  extensive  tracts  of 
land  in  coimnon,  which  was  called  commondage.     In 


Colonial  Taxation  7 

the  Hudson  valley  considerable  pasture  and  wood  land 
was  held  in  common  until  after  the  Eevolution.  It 
was  not  till  1806  that  the  Commons  of  the  Town  of 
Hurley  in  Ulster  County  was  divided  among  the  free- 
holders of  the  to^vn  by  an  act  of  the  Legislature. 

Quit  rents  were  never  developed  into  a  distinct  land 
tax.  The  English  followed  the  custom  of  the  Dutch 
of  leasing  the  public  lands  to  settlers  for  the  yearly 
payment  of  a  small  quit  rent.  The  rates  in  1678  were 
from  $.40  to  $1.50  (30d.  to  lOOd.)  per  one  hundred 
acres.  Apparently  these  low  rates  were  never  raised 
and  there  was  great  laxity  in  collecting  even  these 
small  amounts.  The  single  tax  doctrine  of  ground 
rents  was  not  in  favor  with  these  early  colonists. 

In  1716  Governor  Robert  Hunter  proposed  in  a  let- 
ter to  the  Lords  of  Trade  to  derive  a  large  revenue 
from  the  quit  rents.  His  suggestion,  however,  went 
unheeded.    His  letter  is  as  follows : 

' '  There  is  one  thing  I  would  propose  to  your  Lord- 
ships   In  the  Infancy  of  the  English 

government  here  Lands   were   granted  without   any 

reservation  of  Quit  Rents .  Others  were 

granted  with  a  reservation  of  such  Quit  Rents  as  then 
were  or  should  thereafter  be  established  by  the  Laws 

of  this  country,  others are  under  a  very 

inconsiderable  Quit  Rent ;  Those  granted 

are  with  Reservation  of  60  cents  (2s.  6d.)  each  100 
acres,  but  the  quantity  is  so  small  and  there  is  so  little 
in  her  Maj'.  gift,  that  if  all  were  patented,  the  Quit 
Rent  would  amount  to  a  very  inconsiderable  sum,  so 
that  if  your  Lordships  thought  fit  to  advise  the  passing 
of  an  Act  of  Parliament  at  home  that  all  lands  Avithin 
this  province  granted  or  to  be  granted  should  pay  to 
her  Ma.iesty  a  Quit  Rent  of  60  cents  (2s.  6d.)  I  believe 
it  would  goe  a  great  way  in  raising  a  Fund  sufficient 
for  the  government  here." 

From  the  Documentary  History  of  New  York  the 
follo^^^ng  table  is  taken  which  shows  the  irregular 
character  and  small  amounts  of  quit  rents  raised  in 


8 


Taxation  in  New  York 


the  colony  as  compared  with  the  amounts  raised  by 
duties  and  excise: 


Years 

Quit  Rents 

Duties 

Excise 

1691 
1693 
1694 
1695 

£21.12.6  $75  00 
38.11            130  00 

149— i  500  00 
36.17.6       125  00 

£2521.2.11}         $8,500  00 
1916.8. i                    650  00 
3055.11.3            10,300  00 
2313.17.10i         7,850  00 

£203.12                  $670   00 
665.16.6           2,250  00 
862.4.10               500  00 
919.18^              3,100  00 

Quit  rents  were  allowed  to  dwindle,  altho  they  con- 
tinued down  to  the  time  of  the  Revolution;  when  the 
English  authorities  tried  to  induce  lease  holders  to 
conunute  their  annual  quit  rent  by  the  payment  of 
a  round  sum.  The  quit  rents  raised  by  the  Patroons 
culminated  in  the  celebrated  anti-rent  agitation  of 
1836-46,  by  which  the  State  constitution  of  1846  for- 
bid the  leasing  of  agricultural  land  for  a  longer  period 
than  twelve  years.  This  put  a  stop  to  quit  rents  in 
New  York  forever. 

The  first  taxes  in  New  Netherland  were  largely  of  a 
voluntary  nature.  In  1648  for  the  erection  of  a 
church,  and  in  1667  for  the  maintenance  of  a  minister, 
voluntary  offerings  were  solicited.  "When  in  1653  it 
was  necessary  to  put  the  city  in  a  state  of  defense  a 
list  of  forty-two  persons  was  made  out,  who  were 
provisionally  to  contribute  $2,000  (95050  guilders). 
No  formal  assessment  of  property  was  made,  but  the 
magistrates  assigned  roughly  to  each  burgher  what 
they  deemed  his  fair  share  —  ranging  from  four  to 
one  hundred  and  fifty  florins.  The  contributions 
ranged  from  Hendrick  Kip's  $20.00  (50  guilders)  to 
Cornelius  Van  Steenwyck's  $80.00  (200  guilders). 
The  unpopularity  of  this  tax  was  shown  by  the 
extreme  difficulty  found  in  collecting  it. 

Gradually  compulsion  has  to  be  applied  and  the 
taxes  lose  their  voluntary  nature.  To  illustrate  the 
transition  period  notice  the  ordinance  of  1655,  which 
reads : — 

' '  The  Director  General  and  Council  of  New  Nether- 
land consent  that  the  Burgomeisters  of  New  Amster- 


Colonial,  Taxation  9 

dam  shall first  and  foremost  solicit  both  from 

the  trading  shippers,  merchants,  factors  and  passen- 
gers, and  from  the  citizens  in  general,  a  voluntary 
subscription  and  contribution,  each  according  to  his 
condition,  state  and  circimistances,  and  in  case  of 
opposition  or  refusal  either  from  any  disaffected  or 
ill-disposed  persons,  which  the  Director  General  and 

Council  do  not  anticipate, the  Burgomeisters, 

with  the  President  of  the  Schepens  are  authorized 
to  assess  such  according  to  their  circum- 
stances, and  condition  them  to  constrain  to  a  reason- 
able contribution  and  promptly  to  enforce  it  by  execu- 
tion. ' ' 

There  is  still  a  voluntary  character  to  this  contribu- 
tion, for  Peter  Stuyvesant  heads  the  list  and  offers  as 
his  share  $20.00  (50  guilders)  more  than  anyone  else; 
and  as  Cornelius  Van  Tienhoven  offers  $40.00  (100 
guilders),  it  becomes  necessary  for  Stuyvesant  to  give 
$60.00  (150  guilders).  Dominee  Johannes  Megalo- 
pensis  gives  $20.00  (50  guilders)  of  his  own  free  will 
(vrijwillg) ;  but  Johannes  DePeyster  has  to  be  assessed 
(getaxert)  at  $20.00  (50  guilders).  At  the  first  meeting 
of  the  Court  all  l)ut  four  offer  voluntary  contributions. 
At  the  following  meetings  the  more  reluctant  are  pre- 
sent and  many  then  offer  contributions,  but  are  assessed 
at  a  higher  sum  (presenteert  doch  getaxeert).  Some 
are  assessed  a  beaver,  others  work  at  the  city  works 
or  send  their  slaves  in  lieu  of  a  contribution. 

In  1677  a  l)roken  dam  was  to  be  repaired  in  the 
Town  of  New  Castle,  Westchester  County,  and  those 
who  refused  to  contribute  were  to  lose  their  common- 
dage,  as  per  order  of  the  Court : 

''  That  the  Burgers  in  generall  be  called  together 
ant  yt  those  whoe  will  pay  pro  Rata  towards  it.  To 
have  their  parts,  but  those  who  Refuse,  to  Loose  their 
commandage. ' ' 

When  the  Colonial  Assembly  was  established  in 
1683  the  property  tax  gained  its  first  foothold.  In 
the  Charter  of  Liberties  of  that  year,  it  was  provided 


10  Taxation  in  New  Yoek 

* '  That  noe  Aid,  Tax,  Tallage,  Assessment,  Customs, 
Loaiie,  Benevolence,  or  Imposition  whatsoever  shall 
be  layed,  assessed,  imposed  or  levyed  on  any  of  his 
Majesties  Subjects  within  this  Province  or  their 
Estates  upon  any  manner  of  colour  or  pretence,  except 
by  the  act  and  consent  of  the  Governor,  Council  and 
Representatives  of  the  people  in  general  assembly, 
mett  and  assembled. ' ' 

On  November  1,  1683  the  Colonial  Assembly  passed 
the  first  general  tax  and  assessment  law,  which  is 
entitled  ''An  Act  for  the  defraying  of  the  publique 
and  necessary  charge  of  each  respective  City,  towne 
and  County  throughout  this  Province  and  for  main- 
taining the  poor  and  preventing  Vagabonds."  It  is 
interesting  to  notice  the  close  relation  between  local 
taxation  and  the  maintenance  of  the  poor.  Henry 
George  writing  his  ''Progress  and  Poverty,"  in  the 
years  1877-79  says:  "  The  tramp  comes  with  the 
locomotive,  and  alms-houses  and  prisons  are  as  surely 
the  marks  of  material  progress  as  are  costly  dwellings, 
rich  warehouses,  and  magnificent  churches.  Upon 
streets  lighted  with  gas  and  patrolled  by  uniformed 
policemen,  beggars  wait  for  the  passer-by."  But  if 
we  are  to  believe  this  act  passed  by  the  Colonial 
Assembly  in  1683  the  people  were  troubled  by  vaga- 
bonds and  paupers  long  before  the  days  of  the  loco- 
motives and  gas  lighted  streets,  Henry  George  to  the 
contrary  withstanding. 

From  the  Journal  of  the  General  Assembly  this 
act  of  1683  is  copied.     It  reads  as  foUow^s : 

"  Bee  it  enacted  by  the  Governour  Councell  and 
Representatives  in  Generall  Assembly  and  by  the 
authority  thereof.  That  annually  and  once  every 
yeare  there  shall  be  Elected  a  certaine  number  out  of 
Each  respective  Citty,  towne  and  County,  throughout 
this  province,  To  be  Elected  and  Chosen  by  the  Major 
part  of  all  ^Freeholders  and  ffreemen,  which  certain 
number  Soe  duely  Elected,  shall  have  full  power  and 
authority  to  make  an  Assessment  or  certaine  Rate 


Colonial  Taxation  11 

within  their  respective  Cittyes,  Townes  and  Countyees, 
annually  and  once  every  yeare,  which  assessment  and 
certaine  rate  soe  Established  as  aforesaid  shall  be  paid 
in  to  a  certaine  Treasurer,  who  shall  be  Chosen  by  the 
Major  part  of  all  the  ffreeholders  and  ffreemen  of  Each 
respective  Citty,  Towne  and  County ;  which  Treasurer 
soe  duly  Chosen  shall  make  such  payment  for  the 
Defraying  of  all  the  publique  and  necessary  Charges 
of  Each  respective  place  above  mentioned,  as  shall  be 
appointed  by  the  Comiconers  or  their  President,  That 
shall  bee  appointed  in  Each  respective  Citty,  Towne 
and  County,  within  this  province  for  the  Supervising 
the  publique  affairs  and  Charge  of  Each  respective 
Citty,  Towne  and  County  aforesaid.  And  bee  It 
further  provided  by  the  authority  aforesaid,  That  the 
Treasurer  for  Each  respective  Citty,  Towne  and 
County  shall  keep  a  distinct  booke  of  accounts  Con- 
taining a  perticular  account  of  all  moneys,  rates  and 
Assessments  aforesaid,  And  alsoe  of  all  disbursements 
and  pa^anents  of  money  by  warrants  aforesaid,  and 
once  in  Every  yeare  he  shall  bring  his  accounts  to 
such  persons  as  shall  be  appointed  for  the  Audit  of 
the  same  under  the  penalty  of  one  hundred  pounds. 
Except  prevented  by  death  or  Sicknesse.  And  farther, 
whereas  it  is  the  Custome  and  practice  of  his  Maties 
Realm  of  England,  and  all  the  adjacent  Collonyes  in 
America,  That  Every  respective  Citty,  Towne,  parish 
and  precint  doth  care  and  provide  for  the  poor  who 
doe  inhabit  in  their  respective  precints  aforesaid, 
Therefore  it  is  Enacted  by  the  authority  aforesaid. 
That  for  the  Time  to  come  the  respective  Comiconers 
of  Every  County,  Citty,  to\\me,  Parish,  Precint  afore- 
said, shall  make  provision  for  the  maintenance  and 
Support  of  their  poor  respectively. ' ' 

"And  for  the  Prevention  and  discouraging  of  vaga- 
bonds and  idle  persons  to  come  into  the  province  from 
other  parts,  and  alsoe  from  one  part  of  the  Province 
to  another,  Bee  it  Enacted  by  the  authority  aforesaid 
That  all  persons  That  shall  come  to  inhabit  within 


12  '  Taxation  in  New  York 

this  Province  or  any  part  or  place  thereof  and  hath 
not  a  visible  Estate,  or  hath  not  a  manual  Craft  or 
occupacon,  shall  before  he  be  admitted  an  Inhabitant 
give  Sufficient  Surety  That  he  shall  not  be  a  burthen 
or  Charge  to  the  respective  places  he  shall  come  to 
inhabit  in,  which  Security  shall  continue  for  two  years. 
Provided  Alwayes  That  all  those  that  have  manual 
crafts  or  occupacon  may  at  all  times  come  and  inhabit 
in  any  part  within  this  province,  and  be  always  admit- 
ted, Provided  he  maketh  Applicacon  Eight  dayes 
after  his  arrivall  into  any  Citty,  Towne  or  County 
aforesaid  unto  such  person  or  persons  as  are  appointe 
for  the  Governing  the  respective  parts  aforesaid  And 
alsoe  all  vessells  That  shall  bring  any  passengers  into 
this  Province,  the  Master  of  any  such  Vessells  shall 
within  four  and  twenty  hours  after  arrivall  bring  a 
list  of  all  such  Passengers  he  brings  into  this  province 
with  their  quality  and  Condicons  unto  the  Cheife 
Magistrate  of  Each  respective  Citty,  County,  towne 
aforesaid,  under  the  penalty  of  tenne  pounds  Currant 
money  of  this  Province,  Alwayes  provided  That  if  any 
Vessell  bring  in  any  person  not  qualified  as  aforesaid, 
nor  able  to  give  Surety  for  their  well  demeanour. 
That  than  and  in  such  cases  the  Master  of  said  Vessell 
or  vessells  shall  be  obliged  to  transport  all  such  per- 
sons to  the  place  from  whence  they  came,  or  at  least 
out  of  this  Province  and  dependencies.  And  alsoe  if 
any  Vagabonds,  beggars  or  others  remove  from  one 
County  to  another  and  cannot  give  Security  as  afore- 
said. It  shall  be  luwfull  for  the  constable  to  return  such 
persons  to  the  County  from  whence  they  came." 

In  1688  the  assessment  list  of  New  York  City's  seven 
wards  amounted  to  £78,231  ($265,000).  But  it  proved 
to  be  an  impossibility  to  obtain  an  impartial  and  cor- 
rect assessment  as  evidenced  by  the  petition  addressed 
to  the  Governor  by  the  Colonial  Assembly  in  1692, 
which  reads: 

'* that  there  may  be  a  certain  method  for  the 

equal  and  proportionable  assessing  of  subsidies,  We 


Colonial  Taxation  13 

doe  pray  his  Excell.  would  appoint  Commissioners  in 
each  respective  County  for  the  making  an  Estimate  of 
their  Estates,  that  for  the  future  there  may  not  be  such 
uncertaintyes. " 

This  difficulty  of  obtaining  a  correct  assessment  is 
still  manifest  in  our  present  day  taxation,  and  the 
attempt  to  regulate  it  is  at  present  embodied  in  the 
institution  of  State  and  county  boards  of  equalization. 
During  the  eighteenth  century  there  were  numerous 
attempts  to  overcome  this  difficulty  of  a  correct  assess- 
ment by  establishing  fixed  values  at  which  all  kinds  of 
property  should  be  assessed.  Thus  according  to  the 
Journal  of  the  Colonial  Assembly  it  was  proposed  in 
1693  to  assess  arable  and  pasture  land  according  to  its 
annual  yield,  and  other  property,  such  as  slaves, 
houses,  cattle,  sheep  and  goats,  at  varying  sums. 

The  Colonial  Assembly  sought  to  spur  on  the  asses- 
sors to  the  fulfillment  of  their  duty  by  changes  in  the 
wording  of  their  oath  of  office.  In  1691  they  were 
bound  by  oath :  ' '  Well,  truly,  equally  and  according 
to  their  best  understanding  to  assess  and  rate  the 
Inhabitants,  Residents  and  Freeholders  of  the  respec- 
tive places  for  which  they  shall  be  chosen  Assessors. " 

When  the  tax  law  of  1691  was  to  be  amended  in  1703 

it  was  described  as  follows:  ''  which hath  been 

by  experience  found  to  be  very  inconvenient  and  bur- 
densome to  the  inhabitants  of  this  Province,  and  hath 
occasioned  many  Heats,  Animosities,  Strifes  and 
Debates  and  other  differences."  Apparently  taxation 
was  no  more  popular  in  colonial  days  than  it  is  at 
present. 

An  act  passed  by  the  Colonial  Assembly,  December 
16,  1758,  says  that  "  whereas  the  method  now  used  in 
the  City  of  New  York  in  Taxing  Real  and  Personal 
Estates  is  found  to  be  Uncertain  and  Unequal,"  real 
estate  was  to  be  assessed  at  two-thirds  part  of  the  rent 
or  yearly  income,  and  if  occupied  by  the  owner  or  pro- 
prietor to  be  assessed  on  oath  in  like  ])roportion  accord- 
ing to  what  the  true  income  might  be  in  case  the  same 
were  rented  out. 


14  Taxation  in  New  York 

A  special  act  for  Ulster  County  passed  by  the  Colo- 
nial Assembly,  October  20,  1764,  says  that  ' '  Whereas 
the  Taxing,  Rateing  and  Assessing,  Heretofore  made 
by  the  Assessors  in  the  County  of  Ulster,  Hath  not 
been  Equal,  and  in  due  proportion  to  the  Real  and 
personal  Estates,  which  the  Freeholders  and  Inhabi- 
tants of  said  County  do  Possess  and  enjoy,  Assessors 
of  each  respective  Town,  Manor  and  Precinct  were  to 
Assemble  together  and  agree  upon  a  certain  rule  or 
plan  to  calculate  the  true  value  of  the  real  and  personal 
estates  within  said  County.  "  Assessors  were  liable  to 
fine  under  this  act  for  it  also  says :  "  Every  Assessor 
or  Assessors  who  shall  or  may  Neglect,  Delay  or 
Refuse  to  perform  the  duty  required  of  him  or  them 
by  this  act  shall  forfeit  the  sum  of  5£.  ' ' 

People  were  not  as  honest  as  they  should  be  in  colo- 
nial days,  for  there  had  to  be  a  new  levy  in  Ulster 
County  in  1764  to  raise  arrears  of  taxes  according  to 
an  act  of  the  Colonial  Assembly  as  follows : 

'*  Whereas  several  of  the  Collectors  within  the  said 
County  having  collected  the  Taxes  which  have  been 
Assessed  for  their  respective  Districts,  have  converted 
the  same  to  their  own  use  and  are  now  insolvent." 

A  special  act  for  Orange  county,  passed  by  the  Colo- 
nial Assembly,  January  27,  1770,  says  that  "  Whereas 
the  ascertaining  the  Quotas  of  proportions  of  each 
respective  Precinct  in  the  County  of  Orange  towards 
the  Taxes,  Rates  and  Contingent  County  Charges  to 
be  assessed  and  raised  upon  the  said  County,  hath 
hitherto  been  attended  with  great  Difficulty  and  Uncer- 
tainty; and  given  Occasion  for  Disputes  and  Discon- 
tent, for  preventing  for  the  future. ' ' 

**Be  It  Further  Enacted  that  every  Person  subject 
to  such  Tax  or  Charge,  shall  at  all  Times  when  required 
by  the  Assessors  of  the  Precinct  wherein  he  resides, 
or  either  of  them  give  him  or  them  a  view  of  all  the 
improved  Land  in  his  Occupation  and  a  just  Account 
of  all  the  Horses  Cattle  and  Chattels  which  are  his 
Property,  and  ought  to  be  subject  to  such  Tax  or 


CoLOXiAL,  Taxation  15 

Charge,  and  if  any  Person  shall  secret  or  conceal  from 
the  Assessors  any  Part  of  his  improved  Land  Horses, 
Cattle  or  Chattels,  which  ought  to  have  been  subject  to 
such  Tax  or  Charge  he  shall  forfeit  for  ever}^  such 
Concealment  four  Times  the  Amount  or  Value  of  the 
Tax  which  ought  to  have  been  assessed." 

So  much  is  being  said  and  written  concerning  the 
failure  of  our  present  system  of  taxation,  and  it  is 
often  stated  that  in  colonial  days  when  life  was  more 
simple  and  property  had  not  become  split  up  into  so 
many  complex  subdivisions  the  general  property  tax 
worked  fairly  well.  But  by  reading  these  numerous 
acts  of  the  Colonial  Assembly  concerning  taxation  the 
same  difficulties  were  experienced  then  that  are  present 
to-day. 

The  manner  of  obtaining  the  value  of  assessable 
property  is  indicated  by  the  law  of  March  19,  1774: 

''Assessors shall make   an  assessment  in 

the  manner  following,  to  wit :  they  shall  proceed  from 
house  to  house,  throughout  the  said  county,  till  they 
have  gone  thro'  the  whole,  and  shall  make  out  a  true 
and  exact  List  of  all  the  names  of  the  Freeholders  and 
Lihabitants  of  the  said  county,  and  against  the  names 
of  every  such  person  shall  set  down  the  value  of  all 
his  or  her  estate,  real  and  personal,  as  nigh  as  they  can 
discover  the  same  to  be  within  the  said  county."  A 
self  valuation  under  oath  by  the  taxpayers  has  never 
been  attempted  in  New  York. 

The  law  of  April  1,  1799,  provided  ''  that  the  valua- 
tion of  houses  and  lands  within  this  State  lately  made 
by  the  United  States  census  shall  as  soon  as  the  same 
be  completed,  be  deemed  to  be  the  value  of  all  such 
houses  and  lands  for  the  purposes  of  taxation."  Real 
estate  was  only  affected  by  this  law,  for  the  Federal 
census  takers  paid  particular  attention  to  this  class  of 
property.  iUso  the  aforesaid  valuation  was  to  con- 
tinue for  three  years. 

This  law  fixed  the  value  of  various  kinds  of  personal 
property  as  follows:     "  That  all  personal  property, 


16  Taxation  in  New  York 

which  is  by  this  act  made  taxable,  shall  be  set  in  the 
list  at  the  prices  hereinafter  mentioned : — Every  ox  or 
bull  of  four  years  old  and  up^vards,  at  fifteen  dollars ; 
each  cow  more  than  one,  owned  by  any  one  person,  of 
four  years  old  or  upwards,  at  ten  dollars;  all  neat 
cattle  of  three  years  old,  at  six  dollars  each;  all  neat 
cattle  of  two  years  old,  at  four  dollars  each;  each  horse 
or  mare  of  one  year  old  at  eight  dollars ;  each  horse  or 
mare  of  two  years  old  at  fifteen  dollars;  each  horse  or 
mare  of  three  years  old,  at  twenty  dollars ;  each  horse 
(except  stallions)  and  each  mare  more  than  four,  and 
not  exceeding  eight  years  old,  at  thirty  dollars;  each 
gelding  or  mare  more  than  eight,  and  not  exceeding 
twelve  years  old,  at  twenty  dollars;  each  gelding  or 
mare  more  than  twelve  and  not  exceeding  sixteen  years 
old,  at  eight  dollars;  each  stallion  or  stud  horse  of 
more  than  four  years  old  at  three  hundred  dollars; 
every  mule  of  one  year  old,  at  eight  dollars;  every 
mule  of  two  years  old,  at  sixteen  dollars;  and  every 
mule  of  three  years  old  and  upwards,  at  twenty-five 
dollars;  all  swine  more  than  eight,  owned  by  any  one 
person,  of  more  than  one  year  old,  three  dollars;  all 
coaches  at  eight  hundred  dollars ;  each  chariot  and  post 
chaise,  at  seven  hundred  dollars;  each  phaeton  or 
coachee  on  steel  springs,  at  three  hundred  dollars; 
every  other  four  wheel  pleasure  carriage,  and  every 
two  wheel  top  carriage,  at  fifty  dollars ;  every  brass  or 
steel  wheel  clock  at  forty  dollars ;  each  gold  watch  at 
fifty  dollars ;  and  all  other  watches  at  twelve  dollars ; 
every  able  bodied  slave  held  for  life  from  twelve  to 
fifty  years  old,  at  one  hundred  dollars ;  all  river  sloop 
and  vessels  above  thirty  tons  burden  and  not  exceed- 
ing sixty  tons,  at  seven  hundred  and  fifty  dollars.  And 
the  said  assessors  shall  also  ascertain  according  to  the 
best  evidence  they  can  obtain  and  set  down  in  such  list 
the  value  of  the  residue  of  the  personal  estate  of  every 
person  residing  in  such  division  or  assessment  district, 
exclusive  of  their  farming  utensils,  arms  and  accoutre- 
ments for  serving  in  the  militia,  tools  and  implements 


Colonial.  Taxation  17 

of  their  respective  trades  and  professions,  ships  and 
vessels  and  their  cargo  employed  in  trade  and  com- 
merce out  of  this  State,  articles  of  the  produce  of  any 
of  the  United  States,  and  purchased  for  exportation 
and  sale." 

The  statement  is  often  made  that  in  colonial  days 
slaves  went  with  the  land  and  were  assessed  as  real 
estate.  But  so  far  as  New  York  is  concerned  this 
statement  is  not  borne  out  by  this  act  of  1799  which 
assessed  slaves  as  personal  property  at  the  rate  of 
one  hundred  dollars  for  every  able  bodied  slave  held 
for  life  from  twelve  to  fifty  years  old. 

This  act  of  1799  contains  the  first  exemptions  from 
taxation,  which  includes  property  of  the  United  States, 
or  of  the  State,  churches  or  places  of  public  worship, 
personal  property  belonging  to  an}^  ordained  minister 
of  the  gospel,  court  house,  gaol,  alms  house,  or  prop- 
erty belonging  to  any  incorporated  library ;  also  farm- 
ing utensils,  arms  and  accoutrements  for  serving  in  the 
militia,  tools  and  implements  of  their  respective  trades 
and  professions,  ships  and  vessels  and  their  cargo 
employed  in  trade  and  commerce  out  of  this  State, 
articles  of  the  produce  of  any  of  the  United  States,  and 
purchased  for  exportation  or  sale. 

Two  years  later  the  assessors  were  allowed  to  alter 
the  Federal  census  valuation  of  real  estate  as  circum- 
stances required.  This  was  the  only  time  in  the  history 
of  the  State  when  the  Federal  census  was  to  be  taken 
by  the  assessors  as  the  valuation  of  real  estate.  A 
general  tax  law  was  passed  in  1823  and  among  other 
provisions  was  one  that  *'  all  real  and  personal  prop- 
erty shall  be  valued  b}'  the  assessors  for  the  purpose 
of  taxation  at  the  value  they  would  appraise  such 
estate  in  pa\Tnent  of  a  bona  fide  debt  due  from  a  sol- 
vent debtor." 

During  the  Revolutionary  War  New  York  was  under 
two  governments.  The  southern  part  of  the  State, 
including  the  counties  of  Westchester,  New  York, 
Richmond,   Kings,   Queens   and   Suffolk  were   under 


18  Taxation  in  New  York 

English  dominion  from  the  arrival  of  the  English 
army  in  the  smnmer  of  1776  until  the  end  of  the  war. 
The  English  therefore  were  in  possession  of  the  custom 
house  at  the  port  of  New  York  and  the  Americans  had 
to  rely  on  taxation  for  revenue  with  which  to  prosecute 
the  war.  A  tax  levied  by  the  Colonial  Assembly,  March 
28,  1778,  made  a  distinction  between  real  and  personal 
estate,  the  former  to  be  taxed  at  a  rate  of  three  pence 
in  the  pound  and  the  latter  at  a  rate  of  one  and  a  half 
penny  in  the  pound.  If  this  system  of  classifying  prop- 
erty and  taxing  the  different  classes  at  varying  rates 
had  been  continued  there  would  be  less  complaint  that 
personal  property  was  escaping  taxation  and  that  most 
of  the  burden  was  falling  upon  real  estate.  There  has 
been  too  much  of  an  attempt  to  tax  all  kinds  of  prop- 
erty at  the  same  rate  which  has  caused  most  personal 
property  to  evade  taxation  altogether. 

New  York  always  obtained  considerable  revenue 
from  custom  duties.  A  tariff  act  passed  in  1784 
exempted  from  all  duties  goods  and  merchandise  im- 
ported into  the  State  from  any  of  the  other  thirteen 
states ;  but  the  following  tariff  act  passed  by  the  Legis- 
lature April  11,  1787,  made  no  such  exemption  and 
discriminated  especially  against  Connecticut  and  New 
Jersey : 

"Be  it  enacted  by  the  people  of  the  State  of  New 
York,  represented  in  Senate  and  Assembly,  and  it  is 
hereby  enacted  by  the  authority  of  the  same.  That, 
from  and  after  the  first  day  of  August  next,  all  such 
goods  and  merchandise,  as  are  hereinafter  enumerated 
and  mentioned,  which  shall  be  imported  or  brought  into 
this  State,  by  land  or  water,  shall  be  subject  to  duties 
and  imposts  hereinafter  mentioned,  that  is  to  say. 

Every  gallon  of  molasses,  one  penny. 

Every  gallon  of  distilled  spirituous  liquors,  four 
pence, 

Every  gallon  of  Maderia  wine,  eight  pence. 

Every  gallon  of  wines,  other  than  Maderia  wine, 
four  pence. 


CoLONiAii  Taxation  19 

Every  gallon  of  linseed  oil,  eight  pence, 
Every  gallon  of  porter,  ale  or  beer,  six  pence. 
Every  bushel  of  malt,  fonr  pence. 
Every  bushel  of  salt,  water  measure,  six  pence. 
Every  pound  of  snuff,  six  pence. 
Every  pound  of  manufactured  tobacco,  three  pence, 
Every  pound  of  loaf  or  lump  sugar,  two  pence. 
Every  pound  of  other  sugar,  a  half  penny. 
Every  pound  of  coffee,  one  penny, 
Every  pound  of  chocolate,  three  pence. 
Every  pound  of  pepper,  three  pence. 
Every  pound  of  pimento  or  alspice,  one  penny, 
Every  pound  of  steel,  three  farthings. 
Every  pound  of  dressed  leather,  four  pence. 
Every  pound  of  tanned  leather,  three  pence, 
Every  pound  of  spikes,  and  every  pound  of  nails 
commonly  called  three  penny  nails,  and  of  all  nails 
of  a  larger  size,  one  penny, 

Every  pound  of  Bohea  tea,  imported  direct  from 
Asia,  in  ships  or  vessels  of  the  built  of  this  State,  or 
whereof  three-fourths  parts  are  owned  by  citizens 
residing  in  this  State,  three  pence. 

On  every  pound  of  Bohea  tea,  otherwise  imported, 
four  pence. 

Every  pound  of  tea  of  a  superior  quality,  imported 
directly  from  Asia,  in  ships  or  vessels  of  the  built  of 
this  State,  or  whereof  three-fourths  parts  are  owned 
by  citizens  residing  in  this  State,  six  pence. 

Every  pound  of  tea  of  a  superior  quality,  otherwise 
imported,  eight  pence. 

Every  pound  of  cheese,  four  pence. 
Every  pound  of  starch  or  hair  powder,  four  pence, 
Every  hundred  weight  of  cordage,  four  shillings. 
Every  hundred  weight  of  liar  iron,  four  shillings, 
Every  pound  of  raisins,  currants,  almonds,  prunes 
or  figs,  one  penny, 

Every  hundred  weight  of  iron  hollow  ware,  six  shil- 
lings. 


20  Taxation  in  New  York 

Every  hundred  weight  of  nail  rods,  four  shillings, 

Every  dozen  bottles  of  wine,  in  bottles  commonly 
called  •  quart  bottles,  and  in  that  proportion  for  all 
wines  in  bottles,  two  shillings, 

Every  dozen  bottles  of  malt  liquors,  in  bottles  com- 
monly called  quart  bottles,  and  in  that  proportion  for 
all  bottled  malt  liquors,  one  shilling  and  six  pence. 

Upon  carriages  of  pleasure  from  a  foreign  port  as 
follows : 

Every  coach,  chariot  or  post  chaise,  or  coach,  chariot 
or  post  chaise  box,  fifteen  pounds, 

Every  other  four  wheeled  carriage  of  pleasure,  eight 
pounds. 

Every  two  wheeled  carriage  of  pleasure,  four 
pounds, 

Every  clock,  twentj''  shillings. 

Every  dozen  of  scythes,  siths  or  axes,  twelve  shil- 
lings. 

Every  saddle,  ten  shillings. 

Every  dozen  of  saddle  trees,  twelve  shillings. 

Every  pair  of  women's  or  children's  shoes  or  slip- 
pers of  stuff  or  morocco  leather,  sixpence. 

Every  pair  of  women's  silk  shoes,  one  shilling, 

Every  pair  of  men's  or  women's  leather  shoes  or 
slippers,  six  pence. 

Every  pair  of  boots,  four  shillings. 

Every  pair  of  boot  legs,  one  shilling  and  sixpence, 

Every  dozen  packs  of  playing  cards,  four  shillings. 

Every  pair  of  wool  or  cotton  cards,  six  pence, 

And  the  following  articles  at  and  after  the  rate  of 
seven  pounds  ten  shillings  per  centum  ad  valorem,  to 
be  computed  on  the  prime  cost : 

Anchovies,  olives,  capers,  horse  harness,  bridles,  stir- 
rup irons,  bridle  bits,  pictures  with  or  without  frames, 
paper  hangings,  pewter  and  block  tin  hollow  ware,  pan- 
tiles and  all  sorts  of  earthen  and  glassware,  china  ware, 
writing  paper,  blank  books,  quills,  brushes,  horn  combs 
and   all   other  articles   made  wholly   of  horn,   plane 


CoLoxiAx,  Taxation  21 

stocks,  and  all  kinds  of  manufactured  tools  of  wood, 
men's  and  women's  hats  (excepting  wool  hats)  foreign 
marble,  and  cabinet  and  joiners'  work. 

And  the  following  articles  at  and  after  the  rate  of 
five  pounds  per  centum  ad  valorem  to  be  computed  on 
the  prime  cost,  that  is  to  say : 

Beef,  pork,  butter,  candles,  soap,  anchors,  all  uten- 
sils made  in  the  whole  or  in  part  of  copper,  tin  or 
brass,  bellows,  shovels  and  spades,  sad  irons,  screw 
augurs,  frying  pans,  drugs  and  medicines,  flour  of  mus- 
tard, white  rope,  twine  and  white  lines. 

And  all  other  goods  and  merchandise  not  herein 
before  enumerated  and  mentioned,  at  and  after  the 
rate  of  two  pounds  ten  shillings,  per  centimi  ad 
valorem,  to  be  computed  upon  the  prime  cost,  except- 
ing raw  hides,  whale  and  fish  oil,  mahogany,  logwood, 
lignum  vitee,  Nicaragua  wood,  red  wood,  fustick,  and 
all  other  dye  woods,  sheeps  and  cotton  wood,  whale 
bone,  beaver,  peltry,  furs,  deer  skins,  wood,  madder, 
cochineal,  rocou,  bees  wax  and  elephants '  teeth,  and  all 
goods  and  merchandise,  of  the  growth,  production  and 
manufacture  of  any  of  the  United  States  of  America. 

And  be  it  further  enacted  by  the  authority  aforesaid, 
That  from  and  after  the  passing  of  this  act,  no  higher 
or  other  fees  shall  be  demanded  or  received  by  the  col- 
lector for  the  port  of  New  York,  for  entering  inwards 
and  clearing  out  any  vessel  or  boat,  the  property  of 
the  citizens  of  any  of  the  United  States,  arriving  either 
from  the  State  of  Connecticut,  or  from  the  eastern 
division  of  the  State  of  New  Jersey,  and  having  on 
board  any  goods  or  merchandise  subject  to  the  pav- 
ment  of  duties,  by  this  act,  or  any  law  of  this  State, 
and  for  which  the  duties  have  not  been  paid,  than  the 
following,  that  is  to  say,  for  every  vessel  or  boat  of  the 
burthen  of  forty  tons  and  upwards,  and  under  seventy 
tons,  the  sum  of  twenty  shillings. 

For  every  vessel  or  boat,  of  the  burthen  twenty  tons 
and  upwards,  and  under  forty  tons,  the  sum  of  twelve 
shillings. 


22  Taxation  in  New  York 

And  for  every  vessel  or  boat  with  a  deck  thereon  of 
less  burthen  than  twenty  tons,  the  sum  of  eight  shil- 
lings. And  for  entering  inwards,  and  clearing  out- 
wards, any  vessel  or  boat,  the  property  of  a  citizen  or 
citizens  of  any  of  the  United  States,  arriving  either 
from  the  State  of  Connecticut,  or  from  the  eastern 
division  of  the  State  of  New  Jersey,  and  not  having 
on  board  any  goods  or  merchandize  subject  to  the  pay- 
ment of  duties,  by  any  law  of  this  State,  no  higher  or 
other  fees  than  the  following,  that  is  to  say :  for  every 
vessel  or  boat  of  the  burthen  of  forty  tons  and  up- 
wards, and  under  seventy  tons,  the  sum  of  five  shillings. 
For  every  vessel  or  boat  of  the  burthen  of  twenty  tons 
and  upwards,  and  under  forty  tons,  the  sum  of  three 
shillings.  And  for  every  vessel  or  boat,  with  a  deck 
thereon,  of  less  burthen  than  twenty  tons,  the  sum  of 
two  shillings. ' ' 

The  City  of  New  York,  with  its  population  of  thirty 
thousand  souls,  had  long  been  supplied  with  firewood 
from  Connecticut,  and  with  butter,  cheese,  chickens  and 
garden  vegetables  from  the  thrifty  farms  of  New  Jer- 
sey. This  trade  was  ruinous  to  domestic  industry 
thought  the  people  of  New  York,  and  so  under  the 
above  custom  duties  act  every  Jersey  market  boat 
which  was  rowed  across  Paulus  Hook  to  Cortlandt 
Street  was  required  to  pay  entrance  fees  and  obtain 
clearances  at  the  custom  house,  just  as  was  done  by 
ships  from  London  or  Hamburg ;  and  not  a  cartload  of 
Connecticut  firewood  could  be  delivered  at  the  back 
door  of  a  country  house  in  Beekman  Street  until  it 
should  have  paid  a  heav>^  duty. 

An  address  of  Melancton  Smith  when  the  adoption 
of  the  Constitution  of  the  United  States  was  under 
consideration  said  in  part  as  follows : 

'*  It  cannot  be  controverted,  that  Connecticut  and 
New  Jersey  were  very  much  influenced  in  their  deter- 
mination on  the  question,  by  local  considerations.  The 
duty  of  impost  laid  by  New  York,  has  been  a  subject 
of  complaint  by  those  states.     The  new  constitution 


Colonial.  Taxation  23 

transfers  the  pow<'r  of  imposing  tliese  duties  from  the 
state  to  the  general  government,  and  carries  the  pro- 
ceeds for  the  use  of  the  union,  instead  of  that  of  those 
states.     This  is  a  popular  matter  with  the  people  of 

Connecticut  and  New  Jersey To  excite  in  the 

minds  of  the  people  of  Connecticut  and  New  Jersey 
an  attachment  to  the  new  system,  the  amount  of  rev- 
enue arising  from  our  impost  has  been  magnified  to  a 

much  larger  smn  than  it  produced The  amount 

of  the  revenue  from  impost  for  two  years  past  has  not 
exceeded  fifty  thousand  pounds  currency,  per  annmn, 
and  a  drawback  of  duties  is  allowed  by  law,  upon  all 
goods  exported  to  Connecticut  and  New  Jersey  in  casks 
or  packages  unbroken." 

Many  prominent  citizens  of" the  State  were  loath  to 
surrender  to  the  general  government  this  right  to  raise 
revenue  in  New  York  by  the  imposition  of  custom 
duties,  and  these  people  opposed  the  adoption  by  New 
York  of  the  United  States  constitution. 

The  question  of  taxation  played  a  prominent  part  in 
the  pros  and  cons  relative  to  the  adoption  of  the  United 
States  constitution.  George  Clinton  in  the  New  York 
Journal  for  December  16,  1787,  in  opposition  to  the 
adoption  of  the  Constitution,  among  other  things,  said : 
'*  There  will  be  a  capitation  or  poll  tax,  a  tax  on  win- 
dow lights,  etc.  and  a  long  train  of  impositions  which 
their  ingenuity  will  suggest;  but  you  ^vi\\  be  numbered 
like  the  slaves  of  an  arbitrary  despot;  and  what  will 
be  3'our  reflections  Avhen  the  tax  master  thunders  at 
your  door  for  the  duty  on  that  light  which  is  th<'  bounty 
of  heaven." 

Ak'xander  Jlamilton  in  Xuml)er  'AG  of  The  Federal- 
ist, answering  some  of  these  objections  to  the  taxation 
article  of  the  Constitution  said:  "Many  specters 
have  been  raised  out  of  this  power  of  internal  taxation, 
to  excite  the  apprehensions  of  the  peoiple — (loul)le  sets 
of  revenue  officers  —  a  duplication  of  their  burdens  by 
double  taxations,  and  the  frightful  forms  of  odious  and 
op])ressive  poll  taxes,  have  been  played  off  with  all  the 
ingenious  dexterity  of  political  legerdemain. 


24  Taxation  in  New  York 

As  to  the  first  point  there  are  two  cases  in  which 
there  can  be  no  room  for  double  sets  of  officers;  one, 
where  the  right  of  imposing  the  tax  is  exclusively 
vested  in  the  Union,  which  applies  to  the  duties  on 
imports;  the  other,  where  the  object  has  not  fallen 
under  any  State  regulation  or  provision,  which  may 
be  applicable  to  a  variety  of  objects.  In  other  cases 
the  probability  is,  that  the  United  States  will  either 
wholly  abstain  from  the  objects  preoccupied  for  local 
purposes,  or  will  make  use  of  the  State  officers,  and 
State  regulations,  for  collecting  the  additional  impo- 
sition. ' ' 

The  Federal  government  has  levied  five  direct  taxes 
upon  the  states,  one  in  1798,  one  in  1814,  one  in  1815, 
one  in  1816,  and  one  in  1861.  New  York's  quota  of 
these  direct  taxes  is  given  in  the  following  table : 

1798 $181,680.70 

1814 430,141.62 

1815 860,283.24 

1816 430,141.62 

1861 2,213,333.00 

In  recent  years  the  Federal  government  has  been 
invading  the  State's  sources  of  revenue  by  knying  an 
income  tax  and  an  inheritance  tax.  The  last  tax  has 
been  levied  in  spite  of  the  protest  of  the  National  Tax 
Association. 

It  is  interesting  to  note  that  Hamilton  thought  that 
the  cost  of  the  State  governments  after  they  paid  their 
debts  contracted  during  the  Revolutionary  War  would 
never  exceed  a  million  dollars  a  year.  To-day  the  cost 
of  the  State  government  of  New  York  alone  amounts 
to  over  sixty  million  dollars  a  year. 

The  Legislature  on  October  22,  1779,  passed  an  act 
of  attainder  against  the  following  loyalists  and  also 
confiscated  their  property: 

''  That  John  Murray,  earl  of  Dunmore,  formerly 
governor  of  the  colony  of  New  York;  William  Try  on, 


Colonial  Taxation  25 

esquire,  late  governor  of  the  said  colony ;  John  Watts, 
Oliver  DeLancey,  Hugh  Wallace,  Henry  White,  John 
Harris   Cruger,   William  Axtell  and  Roger  Morris, 
esquires,   late   members   of  the   council   of  the   said 
colony;  George  Duncan  LudloAv,  and  Thomas  Jones, 
late  justices  of  the  Supreme  Court  of  the  said  colony ; 
John  Tabor  Kempe,  late  attorney  general  of  the  said 
colony;  William  Bayard,  Robert  Bayard,  and  James 
DeLancey,  now   or  late   of  the   City   of   New  York, 
esquires;   David  Matthews,  late  mayor   of  the   said 
city;  James  Jauncey,  George  Folliot,  Thomas  AAliite, 
AVilliam    McAdani,     Isaac    Low;,    Miles     Sherbrook, 
Alexander    Wallace,    and    John    Wetherhead,    now 
or  late  of  the  said  city,  merchants;   Charles  Ingiis, 
of    the    said    city,    clerk,    and    Margaret,    Ms    wife; 
Sir   John   Johnson,    late    of    the    county    of    Tryon, 
knight    and    baronet;    Guy    Johnson,    Daniel    cfaus, 
and   John  Butler,   now  or   late   of  the   said  county, 
esquires ;  and  John  Joost  Herkemer,  now  or  late  of  the 
said  county,  yeoman;  Frederick  Philipse  and  James 
DeLancey,  now  or  late  of  the  said  county  of  West- 
chester, esquires;  Frederick  Philipse   (son  of  Fred- 
erick) now  or  late  of  said  county,  gentleman;  David 
Colden,  Daniel  Kissam  the  elder,  and  Gabriel  Ludlow, 
now  or  late  of  the  county  of  Queens,  esquires ;  Philip 
Skeene,  now  or  late  of  the  county  of  Charlotte,  esquire ; 
and  Andrew  P.  Skeene,  son  of  the  said  Philip  Skeene, 
late  of  the  county  of  Charlotte;  Benjamin  Seaman,  and 
Christopher  Billop,  now  or  late  of  the  county  of  Rich- 
mond, esquires ;  Beverly  Robinson,  Beverley  Robinson 
the  younger,  and  Malcolm  J^forrison,  now  or  late  of  the 
county   of   Dutchess,   esquires;   John    Kane,   now   or 
late  of  said  county,  gentleman;  Abraham  C.  Cuyler, 
now  or  late  of  the  county  of  Albany,  esquire;  Robert 
Leake,  Edward  Jessup,  and  Ebenezer  Jessup,  noAv  or 
late  of  the  said  county,  gentlemen;  Peter  Du  Bois,  and 
Thomas  H.   Barclay,  now  or  late  of  the  county  of 
Ulster,  esquires ;  Susannah  Robinson,  -wife  of  the  said 


26  Taxation  in  New  York 

Beverly  Robinson,  and  Margaret  Morris,  wife  of  the 
said  Roger  Morris;  John  Rapelje  of  the  county  of 
Kings,  esquire;  Gleorge  Muirson,  Richard  Floyd,  and 
Parker  "VVicldiam,  of  the  county  of  SuffoD^,  esquires; 
Henry  Lloyd,  the  elder,  late  of  the  State  of  Massachu- 
setts Bay,  merchant;  and  Sir  Henry  Clinton,  knight, 
be  and  each  of  them  are  hereby  severally  declared  to 
be,  Ipso  Facto,  convicted  and  attainted  of  the  offense 
of  adhering  to  the  enemies  of  this  State." 

Of  the  above  mentioned  loyalists  Reverend  Charles 
Inglis,  who  is  designated  clerk  in  the  attainder,  was  the 
rector  of  Trinity  Church  in  New  York  City ;  John  Joost 
Herkemer  was  a  brother  of  General  Nicholas  Her- 
kemer,  the  American  commander  at  the  Battle  of  Oris- 
kany;  and  Abraham  C.  Cuyler  was  the  mayor  of 
Albany  and  David  Matthews  was  the  mayor  of  New 
York  City  at  the  outbreak  of  the  Revolutionary  War. 
So  bitter  appears  to  have  been  the  feeling  at  that  time 
that  the  wives  of  some  of  these  loyalists  were  also 
attainted. 

It  is  difficult  to  justify  these  harsh  measures.  The 
constitution  of  the  United  States  adopted  in  1788  pro- 
hibits Congress  from  passing  any  bill  of  attainder  and 
also  prohibits  any  State  from  passing  any  bill  of 
attainder. 

Alexander  Clarence  Flick  in  his  book, ' '  Loyalism  in 
New  York  during  the  American  Revolution,"  estimates 
that  the  State  of  New  (York  realized  over  three  million 
six  hundred  thousand  dollars  from  the  sale  of  the  con- 
fiscated estates  of  the  loyalists.  No  complete  records 
are  on  file  in  any  State  department,  but  from  the  pub- 
lic sale  of  the  forfeited  estate  of  James  DeLancey  in 
New  York  City  the  sum  of  $234,198.75  alone  was  real- 
ized. The  important  and  lasting  effect  of  confiscation 
in  New  York  State  was  that  large  manors  and  estates 
were  cut  into  small  lots  and  sold  to  the  common  people, 
thus  leveling,  equalizing  and  making  more  democratic 
the  whole  social  structure. 


CHAPTER  11 
INTERNAL   IMPROVEMENTS 

The  period  in  the  history  of  the  State  from  1789  to 
1842  was  one  of  great  internal  improvements  carried 
thru  largely  by  governmental  aid.  During  these  fifty- 
three  years  agriculture  was  the  dominant  industry, 
and  the  needs  of  the  farmer  were  principally  two  in 
number,  namely,  for  capital  and  for  transportation. 

As  the  country  was  new  and  developing  rapidly  in 
many  directions,  capital  was  scarce  and  in  great 
demand.  For  the  State  it  was  a  period  of  surplus 
financiering  due  to  the  large  receipts  from  the  sale  of 
public  lands  and  the  interest  derived  from  the  State 
securities,  which  became  productive  thru  the  funding 
act  of  Congress.  The  State  was  looked  to  for  aid  and 
assistance  by  struggling  farmers  and  manufacturers. 
And  the  State  responded  by  loaning  its  funds  to 
counties,  cities,  banks,  manufacturing  companies, 
corporations  and  individuals,  and  also  became  a  stock- 
holder in  numerous  banks  and  navigation  companies. 
Illustrating  the  State's  generosity  are  a  few  of  the 
loans : 

In  1795  the  Legislature  loaned  to  James  Caldwell 
of  the  City  of  Albany  the  sum  of  £8,000,  on  account  of 
his  factory  ha\dng  been  destroyed  by  fire.  The  same 
year  it  loaned  the  sum  of  £4,000  to  Josiah  G.  Pierson ; 
and  John  Boyd's  manufactury  for  making  scythes  in 
the  Town  of  New  Windsor,  Ulster  County,  having  been 
destroyed  by  fire,  he  received  a  loan  of  £1,500  in  1795. 

The  statutes  prior  to  the  constitutional  convention 
of  1846  show  State  aid  to  thirty-three  corporations, 
many  of  them  receiving  aid  more  than  once.  These 
enterprises  included  ])anks,  bridges,  canals,  charity, 
institutions  of  learning,  manufacturing,  mining,  navi- 

[27] 


28  Taxation  in  New  York 

gation,  railroads,  and  turnpikes.  The  policy  of  render- 
ing State  aid  to  private  enterprises  was  not  only  the 
subject  of  frequent  legislative  action,  hut  it  also 
received  executive  approval.  The  governors'  speeches 
and  messages  contain  frequent  references  to  this  sub- 
ject, and  executive  discussion  and  recommendations 
concerning  it  doubtless  reflected  the  general  sentiment 
of  the  time. 

To  provide  transportation  facilities  the  State  took 
upon  itself  the  burden  of  digging  canals.  In  1816  a 
barrel  of  flour  could  be  transported  from  Cayuga  to 
Montreal  for  $1.50,  whereas  it  cost  $2.50  to  convey  it 
to  Albany.  It  is  not  known  who  first  proposed  con- 
necting the  great  lakes  with  the  Hudson  River  by 
means  of  inland  communications,  altho  George  Wash- 
ington in  July  1783  went  west  on  the  Mohawk  River  as 
far  as  Fort  Schuyler  and  at  that  time  he  saw  the 
advantage  of  a  water  icommunication  between  the  Hud- 
son River  and  the  great  lakes. 

The  construction  of  the  Erie  canal  was  begun  in  1817 
and  completed  in  1825,  and  its  stimulating  effect  upon 
all  branches  of  business,  caused  a  perfect  mania  for 
canal  construction  to  sweep  over  the  State  and  each 
county  clamored  for  a  canal  of  its  own  at  the  expense 
of  the  State. 

The  financial  plan  for  the  management  of  the  Erie 
canal  was  as  follows :  The  canal  fund  was  to  consist 
of  the  proceeds  from  a  tax  of  twelve  and  one-half  cents 
a  bushel  on  salt  manufactured  in  the  State,  duties  on 
goods  sold  at  auction,  a  tax  on  steamboat  passengers, 
tolls  from  the  canal,  grants  and  donations,  and  a  tax  on 
real  estate  located  Avithin  a  distance  of  twenty-five 
miles  from  the  canal.  In  1820  the  question  of  collect- 
ing this  tax  on  real  estate  to  be  benefited  by  the  canal 
was  discussed,  but  no  action  was  taken,  and  no  collec- 
tion was  ever  made.  Thus  the  first  attempt  of  the 
State  to  raise  funds  by  what  was  virtually  a  special 
assessment  failed. 


Colonial  Taxation  29 

Grants  of  land  was  made  to  the  canal  fund  by  cor- 
porations and  individuals  as  follows:  The  Holland 
Land  Company,  100,623  acres  in  Cattaraugus  county, 
on  condition  that  the  canal  be  completed  for  boats  of 
at  least  five  tons  Imrden ;  Hornby,  3,500  acres ;  Bayard 
and  McEves,  2,500  acres ;  Gideon  Granger,  1,000  acres ; 
and  fifty-six  persons  contributed  smaller  amounts.  Ap- 
plication for  aid  was  made  to  the  United  States  and  to 
neighboring  states  on  the  groimd  that  they  would  be 
benefited  by  the  canal;  Imt  no  sums  were  obtained  in 
this  way.  In  spite  of  these  provisions,  chief  reliance 
was  placed  upon  loans,  and  during  the  years  from  1817 
to  1825,  the  State  borrowed  $7,896,150  for  this  purposo. 

There  was  no  sinking  fund  provided  for  paying  off 
the  canal  debt.  The  canal  fund  was  merely  a  trust 
fund,  created  to  furnish  revenue  for  carrying  on  the 
work  of  constructing  the  canal,  and  the  capital  or 
income  of  this  fund  bore  no  relation  to  the  amortiza- 
tion of  the  principal  and  the  interest  on  the  annual 
loans.  There  were  canal  enthusiasts  at  that  time  who 
believed  the  canal  tolls  would  bring  in  so  much  revenue 
that  they  would  not  only  pay  for  the  maintenance  of 
the  canal,  but  would  pay  for  the  cost  of  construction, 
and  might  also  help  pay  the  cost  of  State  government 
as  well. 

In   1825   the   Cayuga   and   Seneca   Canal   and   the 
Oswego  Canal  w^ere  authorized  by  the  Legislature.    In 
1829  two  more  canals  were  authorized  namely,  the 
Crooked  Lake  and  Chemung  Canals.    In  1830  when  the 
construction  of  the  Chenango  Canal  was  under  dis- 
cussion the  canal  commissioners  reported  "  That  the 
Chenango  Canal  would  not  produce  an  amount  of  toll 
.....  .equal  to  the  interest  on  the  cost  and  the  expense 

of  its  repairs  and  superintendence  or  of  either  of 
them."  Both  the  State  Controller  and  the  Governor 
pointed  out  that  the  State  should  not  incur  additional 
expenses  A\itliout  at  the  same  time  providing  the  mivans 
of  defraying  such  expenses.     But  all  these  notes  of 


30  Taxation  in  New  York 

warning  fell  upon  deaf  ears,  for  the  Legislature 
ordered  the  canal  commissioners  to  proceed  with  the 
construction  of  the  Chenango  Canal. 

In  1836  the  Black  River  Canal  was  authorized  by  the 
Legislature.  Time  has  shown  that  the  greatest  benefit 
derived  from  this  canal  has  been  the  permanent  and 
ample  supply  of  water  which  this  canal  affords  to  the 
Rome  level  of  the  Erie  Canal. 

The  same  year  the  Genesee  Valley  Canal  was  author- 
ized. The  Genesee  River,  which  meets  the  Erie  Canal 
at  Rochester,  is  separated  from  the  Allegany  River  at 
Olean  by  a  very  narrow  divide.  By  constructing  a 
canal  across  this  divide  and  by  canalizing  the  two 
rivers,  an  unbroken  inland  w^ater  communication  would 
be  afforded  between  the  important  sections  of  New 
York  and  the  Mississippi  Valley. 

The  Champlain  Canal  was  constructed  the  same  time 
as  the  Erie  Canal. 

By  1835  some  improvement  of  the  Erie  Canal  was 
conceded  to  be  a  necessity,  as  the  original  canal  no 
longer  sufficed  to  carry  the  increasing  volume  of  traffic. 
''An  Act  relating  to  the  Erie  Canal,"  was  passed  that 
year  which  provided  for  the  enlargement  of  the  Erie 
Canal,  and  the  construction  of  a  double  set  of  lift  locks. 
The  cost  of  this  was  estimated  at  $12,416,150,  and  the 
time  required  was  estimated  at  twelve  years.  The 
enlargement  was  not  completed  until  1862,  and  the 
actual  cost  was  over  thirty  million  dollars. 

Governor  William  Learned  Marcy  in  his  message 
of  1835  said  the  general  fund  had  been  reduced  below 
two  hundred  thousand  dollars.  "  Prom  the  origin  of 
our  government  down  to  a  late  period,  taxes  were 
imposed  whenever  the  condition  of  the  treasury 
required  it,  to  raise  the  means  of  defraying  our 
ordinary  expenses.  Taxation  was  discontinued  in 
1826,  not  because  the  income  of  the  general  fund 
was  supposed  to  be  sufficient  to  meet  the  charges  on 
the   treasury,   but   with    the    deliberate   intention    of 


Internal  Improvements  31 

relieveing  the  people  from  further  burdens  until  the 
capital  of  that  fund  should  be  exhausted.  The 
policy  of  this  course  was  questionable.  What  was  then 
foreseen  by  all  as  inevitable  —  the  exhaustion  of  this 
fund  —  has  happened."  He  urged  the  restoration  of 
the  general  fund,  either  by  an  appropriation  of  canal 
tolls  or  by  a  general  tax,  and  strongly  objected  to  bor- 
rowing money  without  making  any  provisions  for  its 
payment,  except  by  relying  on  indirect  revenues.  "  No 
government  that  had  a  proper  regard  for  its  public 
credit  or  its  permanent  prosperity,  ever  contracted  a 
public  debt  without  providing  a  revenue  for  the  pay- 
ment of  the  interest,  at  least,  if  not  for  its  extinguish- 
ment; and  none  that  neglects  to  make  such  a  provi- 
sion but  supplies  necessities  whether  ordinary  or 
extraordinary,  by  loans  and  provides  the  interest  on 
them  by  new  loans,  can  long  prosecute  successfully 
public  enterprises  requiring  large  expenditures.  I 
therefore  deem  it  essential  to  the  success  of  the  sys- 
tem of  internal  improvements  that  you  should,  in  some 
way,  provide  adequate  means  for  paying  the  interest 
on  the  public  debt  that  must  be  incurred  by  its  further 
prosecution. ' ' 

Again  in  1837  Governor  Marcy  informed  the  Legis- 
lature that  temporary  loans  had  been  necessary  from 
the  literature,  bank  and  common  school  funds  in  order 
to  meet  the  demands  of  the  treasury  and  that  new  loans 
would  have  to  be  made  to  raise  funds  to  pay  these 
temporary  loans. 

The  chief  difficulties  in  the  State's  canal  system  aside 
from  extravagance  and  laxity  of  administration  have 
been  in  the  financial  plans  adopted.  To  construct 
canals  out  of  the  surplus  revenues  was  not  a  wise 
policy  on  account  of  the  inevitable  loss  and  derange- 
ment which  resulted  whenever  these  funds  were  insuffi- 
cient. The  competition  of  the  railroads,  which  resulted 
in  forcing  down  the  rates  of  toll,  could  not  perhaps 
have  been  foreseen,  but  a  different  financial  plan  might 
have  obviated  this  calamitv. 


32  Taxation  in  New  York 

STATE  AID  TO  RAILROADS 

State  aid  for  railroads  was  solicited  under  the 
plausible  pretext  of  developing  the  resources  of  the 
iState,  but  in  many  cases  it  resulted  in  swelling  the 
State  debt  and  increasing  the  burden  of  taxation. 
State  bonds  were  issued  to  railroad  companies  with 
the  expectation  that  the  railroads  would  pay  the 
annual  interest  and  the  principal  as  it  fell  due.  Many 
of  the  early  railroads  failed  and  the  bonds  were  thrown 
back  on  the  State  for  redemption.  In  1836  three  mil- 
lions of  dollars  were  authorized  to  be  loaned  to  the 
Erie  Railroad.  On  March  12,  1842,  the  railroad 
announced  its  inability  to  pay  the  interest  of  the  1st 
of  April  on  the  three  millions  of  dollars  loaned  to  it. 

Not  only  the  State,  but  counties,  cities,  towns  and 
villages  loaned  money  with  a  lavish  hand  to  aid  in  the 
construction  of  railroads.  Even  as  late  as  1915  fifty- 
one  towns  and  seven  cities  were  paying  interest  upon 
railroad  bonds  to  the  extent  of  $4,623,590.  A  report 
submitted  to  the  Constitutional  Commission  in  1872 
stated  that  the  bonded  indebtedness  of  toAvns,  villages 
and  cities  at  that  time  in  the  State  in  aid  of  railroad 
construction  amounted  to  $26,946,662.  These  sub- 
divisions of  the  State  vied  with  one  another  in  offering 
bonuses  and  other  special  privileges  to  the  railroads 
for  the  purpose  of  inducing  them  to  come  thru  their 
localities.  The  time  came,  however,  in  the  development 
of  the  railroads  when  the  communities  saw  that  they 
had  gone  too  far,  and  that  public  policy  demanded  a 
more  conservative  course. 

Section  9  of  the  Constitution  of  1846  declared  that 
the  credit  of  the  State  should  not  in  any  manner  be 
given  or  loaned  to  or  in  aid  of  any  individual,  associa- 
tion or  corporation,  thus  preventing  subsidies  to  rail- 
roads or  to  other  enterprises  originated  by  private 
capital.    In  the  constitutional  convention  of  1846  this 


Internal  Impeovements  33 

section  was  adopted  unanimously,  so  thoroly  had 
the  feeling  become  by  tliis  time  that  there  had  been 
a  gross  abuse  in  the  matter  of  the  State  loaning  money 
to  private  enterprises.  It  was  not  until  1874  that  a 
constitutional  amendment  prohibited  the  different  sub- 
divisions of  the  State  from  loaning  money  to  private 
enterprises.  This  amendment  read  as  follows:  "  Xo 
county,  city,  town  or  \'illage  shall  hereafter  give  any 
money  or  property,  or  loan  its  money  or  credit,  to  or 
in  aid  of  any  indiWdual,  association  or  corporation, 
or  become,  directly  or  indirectly,  the  o^iier  of  stock  in 
or  bonds  of  any  association  or  corporation,  nor  shall 
any  such  county,  city,  town,  or  ^^llage  be  allowed  to 
incur  any  indebtedness,  except  for  county,  city,  town 
or  village  purposes." 

The  original  charters  gave  the  railroads  a  right  to 
carry  passengers  only.  In  1836  the  Xew  York  Central 
Eailroad  was  allowed  to  carry  freight  on  condition  that 
it  paid  the  regular  canal  tolls,  and  in  1844  this  privilege 
was  extended  to  all  the  railroads.  Later  this  demand 
was  enforced  only  during  the  season  of  canal  naviga- 
tion, and  finally  in  1851,  all  canal  tolls  on  railroads 
were  abolished.  The  decreasing  tolls  on  canals  began  to 
cause  alarm  in  1854,  and  the  Coromittee  of  AVays  and 
Means  of  the  State  Assembly  reported  a  bill  to  reim- 
pose  tolls  on  railroads.  It  was  seen  now  apparently  for 
the  first  time  that  the  canals  could  not  compete  with  the 
railroads.  The  tolls  on  canals  had  been  frequently 
reduced  to  meet  the  competition  of  railroads.  In  1851 
the  tolls  on  the  canals  amounted  to  $3,702,000,  but  in 
1859  they  had  fallen  to  $1,812,280. 

The  railroad  rates  were  ruinously  low  during  the 
open  canal  season,  and  during  the  closed  season  were 
high  again.  At  last  in  1882  by  a  constitutional  amend- 
ment all  tolls  on  the  canals  were  abolished  and  they 
were  made  entirely  free.  Since  then  the  canals  have 
been  maintained  bv  taxation. 
2 


34  Taxation  in  New  York 


STOP  AND  TAX 


There  was  no  direct  State  tax  from  1826  to  1842. 
The  supporters  of  internal  improvements  were  desi- 
rous of  making  the  financial  condition  of  the  State 
appear  as  prosperous  as  possible,  and  both  political 
parties  in  the  Legislature  opposed  taxation  and  sup- 
ported every  subterfuge  devised  to  meet  the  annual 
expenses  without  resorting  to  taxation.  In  spite  of  con- 
tinued warnings  from  the  State  Controller,  the  capital 
of  the  general  fund  was  used  in  paying  the  annual 
expenses  of  the  State. 

During  the  panic  of  1837  the  State's  credit  was  in 
jeopardy  and  affairs  looked  very  black  indeed,  as 
money  could  not  be  readily  borrowed.  This  is  the 
period  spoken  of  by  W.  P.  Snyder,  Auditor  General  of 
Pennsylvania,  in  his  annual  report  for  1906  when  he 
said:  ''  From  1830  to  1853  was  a  period  in  the  finan- 
cial affairs  of  the  Commonwealth  of  Pennsylvania 
during  which  it  defaulted  in  the  pa^anent  of  the  inter- 
est upon  its  debt,  and  was  driven  to  the  last  extremity 
in  raising  revenue." 

Yet  in  spite  of  the  financial  depression  existing  the 
Ways  and  Means  Committee  of  the  State  Assembly 
in  1838  of  which  Samuel  B.  Ruggles  of  New  York 
City  was  chairman,  presented  a  ''  Plan  to  borrow 
forty  million  dollars  to  be  employed  in  the  more  speedy 
enlargement  of  the  Erie  Canal,  and  the  prosecution  of 
a  gigantic  and  magnificent  scheme  of  internal  improve- 
ments, for  developing  the  mighty  realties  which  the 
future  had  in  store." 

Azariah  Cutting  Flagg  was  Controller  of  the  State 
at  the  time,  and  his  report  concerning  the  Ruggles 
Plan  was  one  of  the  great  financial  documents  of  this 
period.  He  pointed  out  that  if  it  Avas  sound  policy 
to  borrow  to  the  fullest  extent  of  the  means  possessed 
for  paying  the  annual  interest,  there  was  nothing 
that  would  warrant  the  contraction  of  a  debt  of  over 
twelve  million  dollars  since  the  net  revenues  of  the 
State  would  be  sufficient  for  paying  interest  on  only 


Internal  Improvements  35 

that  amoimt.  Furthermore,  he  said,  "  It  is  goin^  to 
the  utmost  verge  of  prudence  to  create  a  debt  sufficient 
to  absorb  the  Avhole  annual  surplus  in  paying  interest, 
and  at  least  the  prospective  increase  from  tolls  ought 
to  be  left  untouched,  as  a  sinking  fund,  to  redeem  the 
principal  of  the  debt. ' '  Another  fallacy  equally  grave 
consisted  "  in  the  total  omission  to  take  into  account 
the  prospective,  but  certain  and  inevitable  expenses  of 
keeping  the  canals  in  repair  and  collecting  the  tolls. 
These  expenditures  for  a  period  of  twenty  years  would 
amount  to  twenty  million  dollars." 

The  financial  rule  as  adopted  by  the  Legislature  in 
1839  was  stated,  *'  to  avoid  the  necessity  of  resorting 
to  taxation  however  small,  the  obvious  and  sound  rule 
of  our  financial  policy  will  be  to  adjust  the  loans  of 
each  year  so  that  the  annual  interest  on  the  whole 
debt  may  always  fall  within  the  clear  income  of  the 
State."  The  plan  was  to  borrow  as  long  as  the  sur- 
plus tolls  afforded  means  of  paying  the  interest,  and  to 
make  no  provision  Avhatever  for  paying  the  principal. 
The  result  was  to  destroy  the  confidence  of  money 
lenders  to  such  a  degree  that  in  the  winter  of  1842  the 
six  per  cent  bonds  of  the  State,  which  in  1833  bore 
twenty  per  cent  premium,  were  not  saleable  at  twenty 
per  cent  discount. 

The  credit  of  the  State  was  now  at  its  lowest  point 
of  depression;  the  contractors  on  public  works  had 
been  without  pay,  in  some  cases,  many  months,  and 
the  total  amount  due  them  and  other  arrearages 
exceeded  one  million  dollars.  The  State  debt,  with  inter- 
est amounted  to  $25,999,074.  Controller  Flagg  in  his 
report  for  1842  stated  the  case  very  tersely  as  follows : 
*'  It  is  not  now  a  question  whether  the  completion  of 
this  canal  will  be  beneficial  to  a  particular  section,  but 
it  is  a  question  of  solvency  or  insolvency;  it  has 
become  purely  a  question  of  finance.  The  impulse  for 
internal  improvement  and  local  interests  regardless 
of  the  condition  of  the  finances  has  pressed  the  State 
to  the  very  brink  of  dishonor  and  ])ankruptcy. ' ' 


36  '  Taxation  in  New  Yoek 

The  result  was  the  ''  Stop  and  Tax  Law  of  1842," 
which  provided  for  raising  a  tax  of  one  mill  on  each 
dollar  of  real  and  personal  estate.  Also  all  expen- 
ditures for  construction  on  the  canals  were  suspended, 
and  only  necessary  expenditures  for  maintenance  and 
repairs  were  allowed.  Bonds  of  the  'State  to  the 
amount  of  $25,089,337,  bearing  seven  per  cent  interest 
for  seven  years,  was  authorized  to  pay  the  State  debts, 
and  these  bonds  of  the  State  were  to  be  redeemed  by 
taxation. 

The  people  were  now  aroused  to  take  some  action  to 
prevent  another  recurrence  of  this  policy  of  dishonor 
and  near  bankruptcy,  and  so  the  constitutional  con- 
vention of  1846  was  called.  Up  to  this  time  there  was 
no  constitutional  debt  limit,  no  opportunity  for  the 
people  to  reject  or  sanction  the  creation  of  a  debt,  and 
no  provosion  for  sinking  funds.  The  new  constitution 
provided  that  the  Legislature  could  not  contract  a 
State  debt  of  one  million  dollars  or  over  without  the 
people  first  voting  on  the  proposition.  There  was  how- 
ever, this  exception,  that  in  case  of  invasion  or  to  sup- 
press insurrection  the  Legislature  could  create  a  State 
debt  of  one  million  dollars  or  over  without  first  giving 
the  people  the  opportunity  to  vote  on  the  proposition. 
A  sinking  fund  to  pay  the  canal  debt  was  provided. 
And  also  the  credit  of  the  State  should  not  be  loaned 
to  any  corporation.  The  constitution  of  1846  was 
adopted  by  the  people  by  a  larger  majority  than  that 
given  to  the  adoption  of  any  other  constitution  sub- 
mitted to  the  people  for  their  approval,  thus  showing 
the  almost  unanimous  desire  for  a  reform  in  their 
financial  matters. 

How  few  realize  to-day  that  the  State  was  nearer 
bankruptcy  in  1842  than  at  any  other  time  in  its  his- 
tory, all  brought  about  by  the  lack  of  a  sound  financial 
system  to  carry  on  the  internal  improvements  then 
under  way.  The  canal  system  was  a  wonderful  impetus 
to  the  development  and  growth  of  the  State,  but  it  was 
unfortunate  that  it  was  entangled  with  a  bad  financial 
plan. 


CHAPTER  III 

EARLY  SOURCES  OF  STATE  REVENUE 

The  General  Fund  in  1789  consisted  of  the  State 
lands,  a  considerable  amount  of  cash  and  securities 
acquired  thru  the  operation  of  the  Funding  Act  of 
Congress,  and  the  ordinary  revenues.  It  was  expected 
that  the  annual  revenue  would  be  more  than  sufficient  to 
pay  all  the  ordinary  expenses  of  the  government  for 
many  years.  Unfortunately,  however,  the  fund  was  so 
badly  managed  that  by  1835  Governor  Marcy  in  his 
annual  message  to  the  Legislature  stated  that  the 
general  fund  had  been  reduced  below  two  hundred 
thousand  dollars. 

SALE  OF  PUBLIC  LANDS 

During  the  years  1790  to  1795  the  proceeds  from  the 
sale  of  public  lands  amounted  to  fifty  per  cent  of  the 
entire  State  revenue.  The  greatest  amount  received 
in  any  one  3'ear  was  in  1792,  when  three  hundred  and 
twenty-five  thousand  dollars  was  received  out  of  a 
total  revenue  of  $595,500.  It  was  thought  that  a  fund 
would  accumulate  from  this  source  which  would  relieve 
the  people  of  the  burden's  of  taxation  for  the  support 
of  the  government.  No  such  fund,  however,  was 
allowed  to  accumulate. 

In  colonial  days  lands  were  generall}^  granted  with 
the  reservation  of  a  certain  rent  to  be  paid  annually 
either  in  money  or  kind.  The  rates  in  1678  were  from 
$0.40  to  $1.50 '(30d  to  lOOd)  per  one  hundred  acres. 
Apparently  these  low^  rates  were  never  raised  and 
there  was  great  laxity  in  collecting  even  these  small 
amounts. 

In  1710  Governor  Robert  Hunter  thought  the  colonj^ 
could  collect  a  large  revenue  from  the  quit  rents.    But 

[371 


38  Taxation  in  New  York 

his  suggestion  went  unheeded.  During  the  Revohition- 
ary  War  the  English  authorities  tried  to  induce  lease- 
hoklers  to  commute  their  annual  quit  rents  by  the  pa,y- 
ment  of  a  round  sum. 

In  1819  an  act  was  passed  combining  many  useful 
provisions  of  former  acts  relating  to  the  collection  and 
commutation  of  quit  rents.  The  act  of  1819  made  the 
settlement  very  easy.  Payment  of  sixty  per  cent  of 
the  arrears  and  commutations  would  release  the  lands 
and  the  rents  were  discharged  upon  all  lands  upon 
which  arrears  had  been  paid  up  to  1814. 

The  homestead  laws  of  1783  to  1801  required  actual 
settlement  on  each  six  hundred  and  forty  acres  to  be 
made  in  seven  years.  By  the  acts  of  1801,  1806  and 
1809,  the  time  was  extended  seven  years  from  1801, 
which  would  make  settlement  to  be  made  before  1808 ; 
then  by  the  act  of  1806  extension  Avas  given  ten  years, 
which  would  cause  settlement  to  be  made  before  1818; 
and  finally  the  act  of  1809  gave  a  further  extension  of 
ten  years,  bringing  settlement  down  to  1828. 

The  policy  of  selling  off  the  public  lands  was  adopted 
early  in  the  history  of  the  State.  A  military  tract  of 
one  million  and  seven  hundred  thousand  acres  was  set 
apart  in  the  center  of  the  State  to  pay  bounties  to  the 
soldiers  of  the  Revolutionary  War.  Under  a  law  passed 
in  1791  to  sell  ihe  public  domain  there  was  sold  5,542,- 
173  acres  of  land  for  $1,030,433. 

The  largest  land  grant  made  by  the  State  at  any  time 
was  located  in  Northern  New  York,  and  is  known  as 
Macomb's  Purchase.  As  indicated  by  its  name,  it 
was  not  a  grant,  strictly,  but  a  sale.  The  price  paid 
was  eight  pence  per  acre.  The  purchase  was  made 
January  10,  1792.  It  comprised  3,934,899  acres, 
extending  over  most  of  the  territory  now  included  in 
Franklin,  Herkimer,  Jefferson,  Lewis,  Oswego,  and 
Saint  Lawrence  counties.  Although  the  tract  took  its 
name  from  Alexander  Macomb,  two  other  persons, 
Daniel    McCormick    and    William    Constable,    were 


Early  Sources  of  State  Revenue  39 

associated  with  him  in  the  enterprise  and  appear  to 
have  been  jointly  interested  as  owners. 

John  and  Nicholas  Roosevelt,  James  Caldwell, 
William  Cooper  and  many  others  secured  thousands 
of  acres  of  land  from  the  State  at  prices  ranging  from 
one  to  three  shillings  per  acre.  The  State  lands  were 
thus  distributed  in  a  lavish  manner.  Speculators 
bought  from  the  State  large  tracts  of  land,  opened  it 
up  for  settlement  to  colonists,  and  in  many  cases 
reaped  large  fortunes  through  their  speculations.  By 
1822  only  991,657  acres  of  the  State's  public  lands  were 
left,  and  these  were  turned  over  to  the  Common  School 
Fund  to  be  sold  and  the  proceeds  to  constitute  a  per- 
manent fund. 

In  a  very  careless  manner  were  the  sale  and  manage- 
ment of  the  State's  public  lands  conducted.  In  1804 
an  inquiry  into  the  number  of  mortgages  held  by  the 
State  showed  that  a  considerable  number  were  unpaid, 
that  others  had  been  paid  and  not  cancelled,  and  that 
the  affairs  were  in  a  chaotic  condition.  Suits  had  to 
be  brought  against  the  commissioners  to  recover  the 
amounts  due  the  State.  Tracts  of  land  were  sold  to 
which  the  State  had  not  a  clear  title,  and  this  resulted 
in  subsequent  litigation  on  the  part  of  the  State. 

In  1883  the  State  adopted  a  new  policy.  It  pro- 
hibited the  further  sale  of  lands  which  it  owned  in 
the  Adirondack  and  Catskill  counties.  In  1915  the 
States 's  forest  preserve  consisted  of  1,493,660  acres 
of  land  which  it  owned  in  the  Adirondacks  and  114,- 
282  acres  of  land  which  it  o^^med  in  the  Catskills. 
Thus  the  State  is  buying  back  some  of  the  land  which 
it  sold  so  cheaply  over  one  hundred  years  ago.  It  is 
open  to  criticism  whether  the  State  acted  wisely  in 
disposing  of  its  public  lands  so  lavishly.  The  needs 
of  the  State  were  not  so  pressing  as  to  demand  forced 
sales  of  land  as  was  shown  l)y  the  large  surplus 
revenue  in  the  State  treasury  at  that  time.  True  the 
State  needed  settlers ;  but  the  public  lands  could  have 
been   disposed   of  in   smaller   parcels,   and  not   only 


40  Taxation  in  New  York 

would  the  returns  have  been  greater,  but  a  more  equal 
distribution  of  land  would  have  resulted. 

In  Albany,  Columbia,  Delaware,  Rensselaer  and 
Schoharie  counties  were  large  tracts  of  land  which 
were  held  by  the  descendants  of  the  patroons  of  the 
Dutch  colonial  period.  Even  as  late  as  1848  Governor 
John  Young  in  his  annual  message  to  the  Legislature 
estimated  that  one  million  and  eight  hundred  thousand 
acres  were  still  held  on  leasehold  tenures,  and  that  at 
least  two  hundred  and  sixty  thousand  persons  were 
directly  affected  by  their  provisions. 

Tenants  held  tracts  on  the  manorial  estates  under 
perpetual  leases.  During  the  forties  an  anti-rent 
agitation  was  started  by  these  holders  of  perpetual 
leases.  They  tried  to  impeach  the  title  of  their  land- 
lords and  refused  to  pay  their  rent.  They  were  able 
to  get  a  section  placed  in  the  constitution  of  1846 
forbidding  the  leasing  of  agricultural  land  for  a  longer 
period  than  twelve  years.  This  section  was  retained 
in  the  constitution  of  1894  and  is  still  part  of  the  basic 
law  of  the  (State.  It  resulted  in  breaking  up  the  per- 
petual leases  and  prevented  absentee  landlordism  in 
this  State,  a  system  which  has  been  the  curse  of  many 
countries  of  Europe. 

From  1789  to  1822  inclusive  the  State  has  received 
from  the  sale  of  public  lands  the  sum  of  $1,771,859. 

LOTTERIES 

While  the  statesmen  of  the  early  period  of  the 
State 's  history  were  slow  to  raise  revenue  by  imposing 
a  direct  tax  upon  the  people,  they  found  another  means 
of  raising  revenue  and  that  was  by  lotteries.  The 
preambles  to  many  of  the  early  lottery  statutes  show 
that  lotteries  were  proposed  to  avoid  the  necessity 
of  taxation,  said  to  be  too  heavy  for  the  people  to  bear 
by  reason  of  losses  sustained  or  indebtedness  incurred 
in  time  of  war. 

McMaster  in  his  history  of  the  United  States  says : 
**  The   funding  act   of   1790  was  highly  popular  in 


Early  Sources  of  State  Revenue  41 

the  Northern  and  Eastern  states,  because  here  the 
greater  part  of  the  army  had  been  maintained  and  here 
tens  of  thousands  of  farmers,  tradesmen  and  mer- 
chants had  come  into  possession  of  certificates  in  final 
settlement.  In  a  moment  they  found  themselves  in 
possession  of  valuable  government  script.  A  rage  for 
speculation  sprang  uj)  of  which  one  phase  of  tliis  mania 
for  speculation  was  the  lottery  craze.  Money  grew' 
easier  and  plentiful,  even  the  poorest  laborer  in  the 
ditches  was  enabled  to  gratify  his  taste  for  speculation 
by  venturing  a  few  shillings  in  a  part  ticket  in  one  of 
the  hundred  lotteries  for  schools,  bridges,  roads, 
churches,  etc." 

The  State  lotteries  were  in  the  hands  of  managers 
appointed  by  the  Legislature  who  conducted  the  lot- 
teries, collected  the  funds,  paid  the  prizes  and  turned 
the  receipts  over  to  the  institution  for  which  the  lot- 
tery was  drawn,  or  to  the  State  Treasurer.  Fourteen 
per  cent  of  the  returns  were  allowed  these  managers 
as  compensation  and  for  defraying  all  necessary 
expenses.  The  reports  of  the  State  Treasurer  for  this 
period  does  not  show  the  total  sums  collected  from 
lotteries  as  a  large  percentage  of  the  receipts  did  not 
pass  thru  the  State  Treasurer's  hands  at  all. 

It  would  be  exceedingly  difficult  to  enumerate  all  the 
acts  of  the  Legislature  regarding  lotteries,  and  the 
sums  raised,  since  one  lottery  was  often  suspended  to 
make  room  for  another.  An  Assembly  conmiittee  was 
appointed  in  1819  to  report  upon  the  sums  raised  by 
lotteries.  The  following  table  is  taken  from  this 
report : 

Su7ns  Actually  Raised  by  1819. 

Purpose  Amount. 

Roads    $109,100 

Hudson  River  Improvement 108,000 

Literature    62,641 

Union  College 111,338 

Connnon  Schools   37,500 

Botanical  Garden 74,268 


42  Taxation  in  New  York 

Purpose  Amount 

Board  of  Health 25,000 

Charity  20,000 

Sag  Harbor 5,000 

Capitol  Building   32,000 

Grand  total $584,847 

Sums  to  he  Raised. 

Union  College $284,000 

Historical  Society  12,000 

Reimburse  State  Treasury 100,000 

All  Others  165,791 

Total $561,791 


When  the  constitutional  convention  of  1821  met, 
lotteries  were  felt  to  be  a  nuisance  and  an  agitation  was 
in  progress  to  have  them  prohibited.  In  this  consti- 
tutional convention  Delegate  Ogden  Edwards  of  New 
York  City  said  that  lotteries  were  the  very  worst  mode 
which  could  be  resorted  to  for  the  purpose  of  raising 
revenue;  and  Delegate  John  Duer  of  Orange  County 
said  that  the  larger  portion  of  the  revenue  derived 
from  lotteries  would  always  be  drawn  from  the  pock- 
ets of  the  poor,  and  that  by  a  process  which  was  cer- 
tain to  debauch  the  morals  and  augment  the  poverty  of 
those  who  were  betrayed  into  vice  by  legislative 
seduction. 

By  a  vote  of  53  to  47  in  the  constitutional  convention, 
Section  11  of  Article  7,  providing  that  no  lottery  should 
hereafter  be  authorized  in  the  State,  was  adopted; 
and  when  the  people  by  their  votes  approved  the  con- 
stitution of  1821,  the  door  was  forever  closed  to  the 
raising  of  revenue  for  the  State  by  means  of  lotteries. 

ONONDAGA  SALT  SPRINGS 

The  State  acquired  the  Onondaga  salt  springs  from 
the  Indians  in  1795  by  the  payment  of  one  thousand 
dollars  and  the  annual  royalties  of  one  hundred  dollars 


Early  Sources  of  State  Revenue  43 

and  one  hundred  and  fifty  bushels  of  salt.  In  1797  a 
superintendent  was  appointed,  and  the  tracts  was 
divided  into  ten-acre  lots  and  leased  to  individuals, 
requiring  each  lessee  to  manufacture  ten  bushels  per 
year  and  four  cents  per  bushel  was  charged.  In  1817 
the  duty  was  raised  to  twelve  and  one-half  cents  and 
the  proceeds  w^ere  to  go  into  the  canal  fund  for  the  con- 
struction of  the  Erie  Canal.  It  was  at  this  time  that 
New  York  salt  was  selling  for  two  dollars  a  bushel, 
wiiile  salt  from  the  springs  in  other  states  sold  for 
four  dollars  to  seven  dollars.  It  was  confidently 
expected  and  predicted  that  the  New  ,York  works  would 
supply  the  valleys  of  the  Ohio  and  the  Mississippi 
with  salt  and  that  an  increasing  revenue  would  be 
derived.  So  optimistic  were  the  people  about  the 
value  to  the  State  of  these  salt  springs  that  a  section 
was  inserted  in  the  State  constitution  of  1821  prohibit- 
ing the  State  from  forever  disposing  of  them,  which 
reads  as  follows :  ' '  The  Legislature  shall  never  sell 
or  dispose  of  the  salt  springs  belonging  to  this  State, 
nor  the  land  contiguous  thereto,  which  may  be  neces- 
sary or  convenient  for  their  use;  but  the  same  shall 
be  and  remain  the  property  of  this  State." 

Alas,  the  fond  hopes  of  the  early  promoters  of  the 
salt  industry  of  deriving  a  large  part  of  the  State's 
revenues  from  the  salt  springs  were  doomed  to  dis- 
appointment. In  1822  the  tax  on  salt  was  reduced  to 
six  cents  per  bushel.  In  1840  a  bounty  of  three  cents 
a  bushel  was  given  by  the  State  on  salt  shipped  out- 
side the  State.  While  this  liounty  caused  a  marked 
increase  in  the  amount  of  salt  manufactured,  it  pro- 
voked much  opposition  among  the  people,  who  saw  a 
situation  produced  whereby  an  inhabitant  of  Massa- 
chusetts could  get  Onondaga  salt  cheaper  than  an 
inhabitant  of  New  York,  while  an  inhabitant  of  New 
York  had  to  pay  annually  his  proportion  of  the  bounty 
which  went  to  a  few  manufacturers.  The  State  Con- 
troller in  his  annual  report  for  1845  said  that  it  was 


44  Taxation  in  New  York 

**  more  just  and  equal  to  support  the  government  by 
general  assessment  on  property  than  by  a  tax  on  salt, 
which  was  an  article  of  necessary  consumption  to  every 
family  in  the  State."  The  bounty  law  was  now 
repealed,  and  the  tax  on  salt  was  reduced  to  one  cent 
per  bushel. 

However,  the  State  constitution  adopted  in  1846  still 
contained  the  section  prohibiting  the  State  from  for- 
ever disposing  of  the  Onondaga  salt  springs.  When 
the  constitutional  convention  of  1867  met  the  salt 
springs  had  ceased  to  be  a  revenue  producer  to  the 
State,  but  were  now  being  operated  at  a  loss.  This 
was  occasioned  by  the  fact  that  salt  could  be  produced 
in  Michigan  and  other  parts  of  the  West  much  cheaper 
than  here.  Yet  a  movement  to  eliminate  the  section 
prohibiting  the  State  from  forever  disposing  of  the 
Onondaga  salt  springs  from  the  proposed  constitution 
was  voted  dowm  in  the  constitutional  convention  of 
1867.  Even  as  late  as  1892  an  amendment  to  the  con- 
stitution to  give  the  Legislature  power  to  dispose  of 
the  Onondaga  salt  springs  was  voted  down  by  the 
peojjle. 

When  the  constitutional  convention  of  1894  met  all 
reference  to  the  Onondaga  salt  springs  was  omitted 
from  the  new  constitution  and  when  the  people  adopted 
this  constitution,  the  way  was  clear  for  the  Legislature 
to  dispose  of  them.  Governor  Levi  Parsons  Morton's 
message  to  the  Legislature  in  1895  said :  ' '  The  prohi- 
bition against  selling  the  Onondaga  salt  springs  has 
been  abrogated.  These  springs  are  a  constant  source 
of  useless  and,  therefore,  unjustifiable  expense  to  the 
iState,  and  the  disposition  to  be  made  of  them  ought 
to  be  promptly  considered  and  determined." 

Following  Governor  Morton's  suggestion  the  Legis- 
lature in  1895  adopted  necessary  legislation  for  the 
sale  of  the  Onondaga  salt  springs  and  they  were  finally 
disposed  of  in  1898.  Thus,  just  one  hundred  years 
following  their  acquisition  by  the  State,  the  attempt 
was  given  up  to  raise  revenue  by  a  State  industry.    It 


Early  Sources  of  State  Revenue  45 

is  pathetic  to  see  how  the  people  retained  the  Onondaga 
salt  spring  long  after  they  had  become  a  losing  propo- 
sition. Many  insisted  that  by  a  proper  management 
they  could  be  made  to  yield  a  profit ;  but  the  manage- 
ment of  them  had  been  changed  many  times,  and  it  was 
not  for  a  lack  of  proper  management  that  they  failed 
to  produce  revenue.  One  must  conclude  that  the 
people  wanted  the  cost  of  State  government  paid  by 
other  means  than  by  direct  taxation. 

STEAMBOAT  TAX 

A  law  passed  April  15,  1817,  provided  a  tax  of  $1 
for  each  passenger  by  steamboat  on  the  Hudson  River, 
for  each  trip  over  one  hundred  miles,  and  half  that  sum 
for  any  distance  less  than  one  hundred  miles,  and  over 
thirty  miles.  All  moneys  collected  by  the  steamboat 
tax  was  to  go  into  the  canal  fund  for  the  construction 
of  the  Erie  Canal. 

It  proved  a  very  unpopular  way  of  raising  revenue, 
and  in  1821  the  tax  was  assumed  by  the  steamboat 
companies  and  was  commuted  in  a  fixed  pajmient  of 
five  thousand  dollars  a  year.  The  tax  was  discontinued 
after  1823.  The  total  amount  raised  by  the  steamboat 
tax  was  $73,51 0. 

The  advocates  of  the  steamboat  tax  were  canal 
enthusiasts  who  thought  the  great  highwav  of  travel 
would  be  by  way  of  the  Hudson  River  and  the  Erie 
Canal  to  the  growing  country  of  the  West.  Of  course 
no  account  was  taken  of  the  railroads,  and  it  Avas  the 
latter  perhaps  more  than  anvthing  else  which 
destroyed  the  feasibility  of  the  steamboat  tax. 

PEDDLERS'  LICENSE  TAX 

In  colonial  days  itinerant  peddlers  were  much  more 
common  than  at  present.  Even  as  early  as  1648  com- 
plaints were  made  by  the  resident  merchants  of  New 
Amsterdam  that  they  were  much  harassed  by  the  com- 
petition of  itinerant  peddlers  coming  especially  from 
New  England.     Foreign  traders  were  then  compelled 


46  Taxation  in  New  York 

to  pay  twenty  guilders  for  the  privilege  of  selling  their 
wares  in  New  Amsterdam. 

At  varying  rates,  depending  upon  Avhether  the  trav- 
eling was  on  foot,  with  a  one-horse  wagon,  or  a  team 
and  wagon,  the  peddlers'  license  tax  has  been  con- 
tinued dowai  to  the  present  time.  It  has  never  been  a 
great  revenue  producer,  and  the  receipts  in  any  one 
year  never  exceeded  three  thousand  five  hundred  dol- 
lars. In  1910  it  yielded  only  sixty  dollars.  It  seems  as 
tho  the  State  might  better  abandon  this  means  of  rais; 
ing  revenue,  and  allow  it  to  be  developed  by  the 
municipalities. 

AUCTION  DUTIES 

The  auction  duties  resulted  from  a  tax  imposed  upon 
the  sale  by  auction  of  wines  and  spirits,  whether 
domestic  or  foreign,  and  all  goods,  merchandise  and 
effects  of  foreign  production  imported  into  the  State. 
In  1801  auctioneers  were  required  to  take  out  a  license, 
to  give  a  bond,  and  their  charges  were  limited  to  two 
and  one-half  per  cent,  of  their  sales. 

In  1817  when  the  construction  of  the  Erie  Canal  was 
authorized  it  was  enacted  that  the  receipts  from  the 
auction  duties  should  go  into  the  canal  fund  for  the 
construction  of  the  Erie  Canal.  The  same  year  the 
system  was  changed  and  auctioneers  were  no  longer 
licensed,  but  instead  were  appointed  by  the  Governor 
and  the  Senate.  The  rates  were  reduced  to  one  and 
one  half  per  cent,  on  the  majority  of  goods.  In  1838 
a  change  was  made  again  and  the  privilege  of  acting 
as  auctioneers  was  extended  to  every  person  giving 
the  requisite  bond  and  filing  it  with  the  State 
Comptroller. 

The  largest  sum  ever  collected  from  auction  duties 
in  any  one  year  was  in  1866  when  it  amounted  to 
$269,720.  This  tax  has  been  dwindling  in  recent  years,^ 
only  $394  being  collected  in  1893.  From  1800  to  1893 
inclusive  the  State  has  collected  $8,969,895  from  auc- 
tion duties.  This  is  another  source  of  revenue  which 
the  State  could  better  leave  to  the  municipalities  to 
develop. 


CHAPTER  IV 
PUBLIC   EDUCATION 

In  1917  there  was  levied  by  tax  for  the  support  of 
the  public  schools  of  the  State  the  sum  of  $70,521,- 
739.58.  This  is  more  than  the  cost  of  the  State 
government.  Add  to  this  $6,754,609.34  given  by  the 
State  in  aid  of  the  public  schools,  and  when  w^e  con- 
sider the  amount  spent  in  support  of  higher  education 
consisting  of  colleges  and  universities,  and  the  amount 
spent  in  supjjort  of  parochial  schools,  we  can  realize 
the  magnitude  of  the  educational  system  of  the  State. 

As  a  Dutch  colony  schools  were  established  thruout 
the  settlements.  Adam  Roelantsen  was  the  earliest 
knowTi  schoolmaster  in  the  colony.  He  was  licensed 
to  teach  August  4, 1637.  What  salary  he  received,  and 
from  whence  it  came  can  only  be  surmised  as  prac- 
tically nothing  is  known  of  his  school  keeping. 

The  Dutch  schools  were  closely  allied  with  the  Dutch 
church.  In  the  cliurch  beside  the  minister  were  the 
voorlezer  or  reader,  and  voorsanger  or  precenter.  The 
voorlezer^s  duty  was  l)efore  the  sermon  to  read  a  chap- 
ter out  of  the  Bil^le  and  beside  as  clerk  to  keep  the 
church  records.  The  voorsanger  set  the  psalms.  Very 
frequently  the  same  pei'son  acted  as  both  voorlezer  and 
voorsanger,  and  the  schoolmaster  was  generally  both 
voorlezer  and  voorsanger. 

In  1649  a  complaint  called  the  Great  Remonstrance 
was  sent  to  Holland  by  prominent  inhabitants  of  New 
Amsterdam  and  among  other  things  they  complained 
of  the  misappi'opriation  of  the  funds  collected  by  pub- 
lic subscription  for  a  school  house  and  of  the  irregular 
manner  in  w^hich  the  school  was  kept,  and  expressed 
the  opinion  that  two  masters  should  be  employed. 

Upon  tlie  advent  of  the  second  period  of  English  rule 
in  1674  the  schools  passed  under  the  control  of  the 

[471 


48  Taxation  in  New  York 

Dutch  cliiircli.  The  English  could  see  only  a  menace 
to  their  power  in  maintaining  schools  for  the  Dutch. 
Consequently  these  Dutch  schools  were  no  longer  offi- 
cial schools.  Neither  were  they  free  schools  as  tuition 
was  charged,  although  the  poor  were  exempted  from 
paying  tuition.  With  a  short  sighted  policy  these 
Dutch  schools  did  not  teach  the  English  language  and 
while  they  continued  down  to  the  Revolutionary  War 
they  gradually  died  out  as  the  people  more  and  more 
became  an  English  speaking  people. 

During  the  English  administration  of  the  colony  the 
English  government  did  nothing  for  elementary  edu- 
cation. It  founded  Kings  College,  now  Columbia 
University,  but  concerned  itself  very  little  with  the 
education  of  the  common  people.  A  missionary  body 
of  the  Church  of  England,  the  Society  for  the  Propaga- 
tion of  the  Gospel  in  Foreign  Parts,  however,  did  estab- 
lish and  support  schools  in  the  colony  in  which  it 
insisted  that  the  English  language  should  be  taught. 
Between  1704  and  1775  it  employed  about  sixty  teach- 
ers, schools  being  maintained  in  Albany,  New  York, 
Richmond,  Suffolk,  and  Westchester  counties.  The 
annual  stipends  allowed  its  teachers  ranged  from  £10 
to  £40. 

The  desire  of  this  missionary  body  was  so  to  engage 
public  opinion  in  the  colony  —  that  self  support  of  the 
schools  would  after  a  few  years  be  assmned  by  the 
inhabitants.  But  that  time  never  came.  Whether  it 
was  poverty  or  educational  indifference  that  prevented 
the  development  of  a  public  school  system  in  the  New 
York  colony  is  hard  to  say.  Apparentl}^  there  was  a 
determination  on  the  part  of  the  colonists  not  to  have 
taxation  imposed  upon  them  for  educational  purposes. 
The  wealthy  of  course  educated  their  children  by 
means  of  special  tutors  or  private  schools  and  so  were 
not  interested  in  the  education  of  the  poor  man 's  child. 

The  schools  established  by  this  missionary  body 
were  to  some  extent  charitv  schools,  as  there  was 


Public  Education  49 

always  an  assurance  in  the  support  given  the  school- 
masters that  a  specified  number  of  children  should  be 
taught  gratis.  Those  able  to  do  so  i)aid  their  tuition. 
The  non-paying  scholars  were  usually  in  proportion  of 
one-fourth  to  one-half  of  the  enrollment.  These  schools 
were  not  reserved  for  the  sole  benefit  of  the  children 
of  church  adherents,  but  admitted  pupils  generally. 
When  the  (State  at  the  close  of  the  Revolutionary  War 
entered  upon  an  educational  policy  it  is  very  likely  it 
patterned  the  common  schools  after  the  schools  main- 
tained here  for  nearly  one  hundred  years  by  the 
Society  for  the  Propagation  of  the  Gospel  in  Foreign 
Parts. 

The  first  legislative  enactment  in  regard  to  a  com- 
mon school  was  in  1791  and  was  an  act  for  building  a 
school  house  and  maintaining  a  school  in  the  Town  of 
Clermont,  Columbia  County.  It  authorized  the  appro- 
priation of  moneys  in  the  hands  of  the  overseers  of 
the  poor,  from  excises  and  fines,  for  the  erection  of  a 
school  house  and  for  maintaining  a  schoolmaster  in 
said  town.  Even  here  no  attempt  to  support  the  school 
by  direct  taxation  was  imposed. 

The  English  evacuated  New  York  City  in  November, 
1783,  and  within  two  months  thereafter  the  State  Legis- 
lature was  in  session  and  Governor  George  Clinton  in 
his  official  message  to  that  body  stated  that  the  most 
important  subject  for  their  consideration  was  the 
necessity  of  providing  for  the  education  of  the  youth 
of  the  State.  Year  after  year  Governor  Clinton,  in  his 
annual  messages,  continued  to  impress  upon  the  Legis- 
lature the  importance  of  providing  elementary  schools. 
Whatever  we  may  think  of  Governor  Clinton 's  conduct 
in  opposing  the  adoption  of  the  constitution  of  the 
United  States  by  this  State,  the  cause  of  education 
never  had  a  more  devoted  friend  and  advocate  than  its 
first  governor.  It  was  not  until  1795  that  the  Legis- 
lature took  action  for  the  establishment  of  common 
schools  thiniout  the  State.    It  may  seem  strange  now 


50  Taxation  in  New  Yoek 

that  there  was  so  much  delay  in  this  matter.  The 
expense  of  inaugurating  a  school  system  was  a  con- 
sideration at  that  day  which  made  many  men  cautious ; 
there  w^ere  those  w^ho  believed  that  parents  should  meet 
the  entire  expense  of  the  education  of  their  children; 
and  there  were  others  who  were  positively  opjoosed  not 
only  to  the  State 's  assuming  direction  of  public  educa- 
tion, but  even  to  the  idea  of  educating  the  masses  at  all. 

The  law  of  1795  authorized  an  annual  appropriation 
of  £20,000  a  year  for  five  years  "  For  the  purpose  of 
encouraging  and  maintaining  schools  in  the  several 
cities  and  towns  in  this  'State,  in  which  the  inhabitants 
residing  in  the  State  shall  be  instructed  in  the  English 
language,  or  be  taught  English  grammar,  arithmetic, 
mathematics  and  such  other  branches  of  knowledge  as 
are  most  useful  and  necessarj^  to  complete  a  good 
English  education."  This  law  appears  to  be  the  death 
knell  of  the  Dutch  schools,  for  the  Dutch  schools  and 
the  English  schools  had  been  existing  side  by  side  in 
the  colony  for  nearly  one  hundred  years. 

As  originally  passed  by  the  Assembly  the  law  of 
1795  provided  for  the  annual  appropriation  of  £30,000 
continuously,  but  it  was  amended  in  the  Senate  to 
£20,000  annually  for  five  years.  The  amended  bill 
finally  passed  the  Assembly  by  a  vote  of  27  to  24.  Wliy 
was  the  Assembly  more  favorably  inclined  towards 
public  education  than  the  Senate  1  Was  the  Assembly 
more  democratic  and  the  Senate  more  aristocratic ;  or 
was  there  opposition  from  the  Dutch  whose  schools 
could  receive  no  share  in  the  State  appropriation  of 
£20,000,  as  the  law  of  1795  insisted  that  the  English 
language  should  be  taught?  Even  as  late  as  1846  Dele- 
gate George  A.  Simmons,  a  la^vyer  of  Essex  County, 
whose  ancestors  came  from  England,  proposed  in 
the  constitutional  convention  of  that  year  a  liter- 
acy test  for  voters  that  they  should  be  able  to  read  and 
write  the  English  language;  when  Delegate  Tunis  G. 
Bergen,  a  farmer  of  Kings  Count}^,  whose  ancestors 


Public  Education  51 

came  from  Holland,  sought  to  amend  it  to  also  include 
the  Dutch  language,  stating  that  according  to  the 
articles  of  capitulation  in  1664  the  Dutch  were  guaran- 
teed all  their  rights,  and  the  free  use  of  the  Dutch  lan- 
guage was  one  of  these  rights.  No  vote  was  taken  on 
either  of  these  propositions  in  the  convention,  however. 
The  Dutch  language  Avas  clung  to  very  tenaciously  by 
the  descendants  of  the  first  settlers  and  even  as  late  as 
the  forties  there  were  sections  in  the  Hudson  Valley 
where  children  could  not  speak  the  English  language 
when  first  entering  the  public  schools.  It  is  fortunate 
that  the  Legislature  in  1795  allowed  no  bilingual  system 
of  education  in  this  State. 

According  to  the  law  of  1795  the  £20,000  a  year  was 
to  be  apportioned  to  the  localities  which  maintained 
schools.  Each  town  was  required  to  raise  by  taxation 
a  sum  equal  to  one-half  the  amount  apportioned  to  it 
from  the  State  fund.  When  we  realize  that  to-day  the 
localities  contribute  by  taxation  nine-tenths  of  the 
money  which  supports  the  public  schools  of  the  State 
and  that  the  State  contributes  only  one-tenth,  we  can 
see  how  generous  the  State  was  in  1795  in  offering  to 
contribute  two-thirds  of  the  money  for  the  support  of 
the  pul)lic  schools  if  the  localities  would  by  taxation 
raise  one-third. 

In  1798  there  had  been  organized  1,352  public  schools 
in  the  'State  having  a  registration  of  59,660  pupils. 
Unfortunately  the  law  expired  in  1800  and  the  State 
did  nothing  more  for  the  conmion  schools  until  1812. 
The  Assembly  passed  a  bill  in  1800  to  continue  the 
appropriations,  but  the  Senate  failed  to  act  on  it.  The 
law  of  1812  divided  the  State  outside  of  the  City  of 
New  York  into  school  districts  with  a  school  organiza- 
tion in  each  district  at  the  head  of  which  was  one  or 
three  trustees  elected  by  the  people.  In  1917  there 
were  over  ten  thousand  school  districts  in  the  State. 
The  school  trustees  were  required  to  keep  a  school 
in  each  school  district  for  a  certain  number  of  weeks 


52  Taxation  in  New  York 

each  year.  They  were  now  required  to  raise  by  tax- 
ation an  amount  equal  to  the  amount  received  from  the 
State.  The  localities'  share  of  the  burden  was  thus 
increased  from  one-third  to  one-half.  Under  the  law 
of  1795  it  was  optional  with  the  localities  whether 
to  have  public  schools  or  not,  but  under  the  law  of 
1812  it  became  obligatory  for  the  localities  to  have 
public  schools. 

During  the  interval  between  1800  and  1812  when 
the  State  was  doing  nothing  for  the  common  schools 
an  educational  work  was  begun  in  New  York  City  in 
1805  under  private  auspices  which  continued  down 
to  1853.  There  were  many  private  schools  in  New  York 
City  which  were  attended  by  the  children  of  the  aris- 
tocratic and  wealthy  families.  There  were  also  man>" 
charitable  and  church  schools,  but  the  twelve  promi- 
nent citizens  of  New  York  who  founded  the  Public 
School  Societ}^  of  New  York  City  in  1805  knew  that 
there  were  many  children  in  the  city  who  liad  no 
opportunity  to  obtain  an  education.  The  first  presi- 
dent of  this  society  was  DeAVitt  Clinton,  who  con- 
tinued as  such  until  his  death  in  1828.  The  society's 
incorporation  was  entitled  ''  An  act  to  incorporate  the 
society  instituted  in  the  City  of  New  York  for  the 
establishment  of  a  free  school  for  the  education  of 
poor  children  who  do  not  belong  to,  or  are  not  provided 
for,  by  any  religious  society."  This  society  received 
voluntary  contributions  and  appropriations  were 
made  to  it  by  the  city  and  by  the  State.  It  participated 
pro  rata  in  the  apportionment  of  the  State  school 
funds. 

Gi-adually  public  sentiment  became  opposed  to  a 
private  corporation's  management  of  schools  which 
were  supported  almost  wholly  from  the  public  treas- 
ury. Po]:)ular  opinion  earnestly  supported  the  idea 
that  public  authorities  should  control  the  public  schools 
and,  in  1842,  the  provisions  of  the  common  school  law 
of  1812  were  extended  to  New  York  Citv  and  a  board  of 


Public  Education  53 

education  and  the  other  necessary  machinery  for  oper- 
ating the  schools  of  a  city  ^\'ere  created.  In  1853  the 
Public  School  Society  surrendered  to  the  city  board  of 
education  all  its  property,  real  and  personal,  valued 
at  $454,421.85  and  wliich  included  seventy-eight 
schools.  Thus  ended  a  system  of  private  management 
of  public  schools.  The  managers  of  the  Public  School 
Society  are  entitled  to  the  greatest  chedit  for  so  mag- 
nanimously surrendering  their  school  property  to  the 
City  of  New  York. 

The  State  constitution  adopted  in  1894  forbids  any 
aid  to  denominational  schools  as  follows : 

"  Neither  the  State  nor  any  subdivision  thereof, 
shall  use  its  property  or  credit  or  any  public  money, 
or  authority  or  permit  either  to  be  used,  directly  or 
indirectly,  in  aid  or  maintenance,  other  than  for  exami- 
nation or  inspection,  of  any  school  or  institution  of 
learning  wholly  or  in  part  under  the  control  or  direc- 
tion of  any  religious  denomination  or  in  which  any 
denominational  tenet  or  doctrine  is  taught." 

DoA^ii  to  1867  the  public  schools  of  the  State  were 
not  free  schools.  Tuition  was  charged  the  children 
whose  parents  were  able  to  pay  for  the  same.  Among 
the  several  duties  of  school  trustees  at  that  time  were 
the  follo^\'ing  prescribed  by  "  To  ascertain  by  the 
teacher's  list  the  persons  who  have  sent  to  school, 
and  the  nmnber  of  children  each  has  sent,  and  the 
number  of  days  each  child  has  attended  and  to  charge 
all  such  persons  with  the  balance  necessary  to  be 
raised  beyond  the  public  moneys  for  the  payment  of 
teacher's  wages,  each  in  proportion  to  the  number  of 
days  and  children  sent  by  him. 

To  exempt  from  the  pa^Tiient  of  such  charge,  in 
whole  or  in  part,  such  indigent  inhabitants  of  the  dis- 
trict as  they  may  deem  proper,  and  to  file  a  list  of 
such  exemptions  in  the  district  clerk's  office. 

To  add  the  amount  of  such  exemption  to  the  first 


54  Taxation  in  New  York 

tax  list  thereafter  to  be  made  out  by  them,  or  to  collect 
it  by  a  separate  tax. 

To  make  out  a  rate  bill  for  the  remainder  of  such 
balance,  containing  the  name  of  each  person  remain- 
ing charged  and  the  amount  to  him  and  to  annex 
thereto  their  warrant,  under  their  hands,  with  or 
without  seal,  for  the  collection  thereof. 

To  deliver  such  rate  bill,  with  their  warrant 
thereto  attached,  to  the  collector. 

To  collect  by  a  district  tax  any  portion  of  any  such 
rate  bill  which  shall  prove  to  be  uncollectible." 

This  was  known  as  the  rate  bill  system.  The 
expenses  of  the  school  district  were  met  in  three  dif- 
ferent ways.  The  fund  apportioned  by  the  State, 
which  was  about  twenty  dollars  for  each  district,  was 
to  be  applied  exclusively  toward  the  payment  of  the 
teacher's  salary;  those  children  whose  parents  were 
able  to  pay  were  compelled  to  pay  for  their  tuition; 
while  tuition  of  the  indigent  and  the  expense  of  pro- 
viding a  school  house,  fuel,  etc.,  was  to  be  met  by  a 
school  district  tax.  This  desire  to  avoid  taxation  was 
responsible  for  the  rate  bill  system.  For  the  school 
year  of  August  1,  1865,  to  July  31, 1866,  there  was  col- 
lected in  the  State  by  rate  bills  the  sum  of  $709,025.36, 
and  for  the  fifty-three  years  this  odious  system  was 
in  force  probably  over  twenty  million  dollars  was 
collected  by  rate  bills. 

The  rate  bill  system  placed  a  burden  upon  the  poor 
which  they  were  not  able  to  meet.  To  avoid  it,  they 
must  acknowedge  that  they  w^ere  indigent.  The  chil- 
dren alfected  were  therefore  publicly  branded  as 
indigent  children  and  the  recipients  of  charity.  The 
whole  rate  bill  system  was  repugnant  to  the  propel 
spirit  of  democratic  institutions.  And  yet  this  ques- 
tion of  doing  away  with  the  rate  bill  system  was  one 
of  the  most  troublesome  in  the  development  of  the 
public  school  system  of  the  State.  It  was  a  subject 
of  bitter  controversy  in  the  Legislature  for  many  years 


Public  Education  55 

before  the  solution  was  finally  reached.  In  the  con- 
stitutional convention  of  1846  the  friends  of  the  free 
school  system  fought  desperately  to  do  away  with  the 
rate  bills,  but  without  success.  It  was  time  of  retrench- 
ment and  the  people  did  not  want  to  be  burdened  with 
increased  taxation. 

Year  after  year  the  free  school  advocates  fought  on, 
and  when  the  Legislature  did  pass  an  act  doing  away 
with  the  rate  bills  the  Court  of  Appeals  declared  the 
law  unconstitutional  on  account  of  technicalities. 
Finally  in  1867  the  Legislature  passed  a  law  abolishing 
rate  bills  and  making  the  public  schools  of  the  State 
free  to  all  of  its  children  between  the  ages  of  five  and 
eighteen.  The  constitutionality  of  this  law  was  never 
challenged.  The  Jong  fight  was  at  last  over  and  it 
is  unfortunate  that  taxation  so  long  stood  in  the  way 
of  the  best  interests  of  the  State.  Few  now  realize 
the  heroic  struggle  of  fifty  years  ago  to  make  the 
pul)lic  schools  free,  which  culminated  in  the  law  of 
which  section  tAventy-six  reads  as  follows : 

*'  Hereafter  all  moneys  now  authorized  by  any 
special  acts  to  be  collected  by  rate  bills  for  the  payment 
of  teachers'  wages,  shall  be  collected  by  tax,  and  not 
by  rate  bill." 

To  aid  public  schools  are  several  State  fmids,  the 
largest  of  which  is  the  Common  School  Fund.  This 
was  created  in  1805  from  the  net  proceeds  of  the  sale 
of  five  hundred  thousand  acres  of  State  land.  There 
could  be  no  distribution  of  tliis  fund  until  the  annual 
revenue  amounted  to  fifty  thousand  dollars.  The  first 
distrilmtion  was  made  in  1815  and  one  has  been  made 
annually  since  that  date.  The  amount  of  this  fund  is 
about  five  million  dollars. 

In  1836  New  York  received  as  its  share  of  the  sur- 
plus in  the  United  States  treasury  the  sum  of  $4,014,- 
520.  This  surplus  in  the  United  States  treasury  at 
that  time  was  deposited  with  the  several  states  for 
safe  keeping  until  called  for  on  the  basis  of  their  repre- 


56  Taxation  in  New  York 

sentation  in  Congress.  This  money  has  never  been 
called  for  by  the  national  government  and  probably 
never  will  be.  New  York  State  devoted  this  money 
wholly  to  the  cause  of  education  and  it  is  known  as 
the  United  States  Deposit  Fund.  The  canal  enthu- 
siasts, however,  were  determined  that  it  should  be  used 
for  canal  construction,  but  the  friends  of  education 
triumphed  and  the  money  was  applied  to  what  has 
proved  to  be  a  much  better  use.  The  fact  that  the 
loan  at  that  time  was  thought  to  be  only  temporary 
and  would  have  to  be  repaid  at  least  in  ten  years '  time 
probably  had  something  to  do  with  its  disposition. 

There  are  several  other  funds,  one  known  as  the 
Literature  Fund  and  another  as  the  Gosepel  and 
School  Fund. 

Probably  no  more  important  advance  in  educational 
matters  since  the  abolishment  of  the  rate  bill  system 
in  1867  was  the  enactment  of  the  township  law  by 
the  Legislature  in  1917.  This  measure  consolidated 
all  the  school  districts  of  the  town  into  one,  abolished 
the  office  of  school  trustee,  and  created  a  board  of 
education  for  each  town.  Equalization  of  the  school 
taxes  among  the  residents  of  the  town  was  one  of  the 
beneficial  results  of  this  measure.  Heretofore  there 
has  been  a  great  inequality  in  the  school  taxes  paid 
by  the  residents  of  the  town.  School  tax  rates  in  one 
school  district  were  very  much  higher  than  in  other 
school  districts.  In  some  school  districts  the  rail- 
roads and  other  corporations  paid  nearly  all  the  school 
taxes,  while  in  school  districts  where  there  were  no 
railroad  or  other  corporation  property  the  school 
taxes  were  excessive. 

As  the  population  of  the  rural  school  districts  has 
been  dwindling  in  recent  years,  and  each  school  dis- 
trict had  to  maintain  a  public  school  a  certain  number 
of  weeks  each  year,  it  resulted  in  some  of  the  rural 
schools  being  maintained  with  but  very  few  scholars. 
By  the  consolidation  of  all  the  school  districts  of  a 


Public  Education  57 

towTi  into  one  district,  one  or  more  central  schools 
could  be  maintained,  providing  a  better  education  for 
the  children  of  the  town.  Those  living  at  a  distance 
from  the  school  could  be  transported  by  conveyance. 
The  children  residing  in  the  country  are  entitled  to 
just  as  good  an  education  as  the  children  residing  in 
the  cities.  At  the  time  of  the  enactment  of  this  law 
there  were  in  the  State  fifteen  public  schools  having 
but  a  single  scholar,  eighty-six  public  schools  having 
but  two  scholars,  sixteen  public  schools  having  but 
three  scholars,  and  over  six  hundred  public  schools 
having  less  than  seven  scholars. 

And  yet  this  good  measure  was  repealed  by  the 
Legislature  of  1918.  Increased  taxation  was  the'prin- 
cipal  objection  raised  by  the  rural  people  against  the 
township  law.  Outside  of  the  cities  of  the  State  the 
increase  in  school  taxes  in  1917  over  1916  amounted 
to  $3,500,990.  The  normal  increase  from  year  to  year 
is  about  seven  hmidred  thousand  dollars.  'So  that* two 
million  eight  hundred  thousand  dollars  was  the  increase 
in  taxes  chargeable  to  the  township  law.  This  is  an 
increase  of  fifty-two  cents  per  capita  for  the  rural 
districts.  There  is  no  doubt  that  eventually  a  town- 
ship law  will  be  permanently  placed  upon  the  statute 
books  of  New  York  State.  Following  the  example 
of  the  free  school  advocates  of  the  nineteenth  century 
who  were  over  twenty  years  in  making  the  public 
schools  of  the  State  absolutely  free  to  all  children, 
the  township  people  will  figlit  on  until  tliev  finally 
triumph. 

The  State  has  never  adopted  a  definite  policy  in 
regard  to  education.  How  far  sliould  the  education  of 
the  youth  of  the  State  go?  Should  the  State  provide 
a  common  school  education  and  stop  tliere,  or  should 
It  provide  a  high  scliool  education,  or  should  it  give 
every  child  in  the  State  a  college  education  ?  Ought 
the  State  to  teach  each  child  a  trade  or  profession » 
These  are  questions   that  will   some  dav  demand   a 


58  Taxation  in  New  York 

solution.  Some  contend  that  it  is  becoming  more  and 
more  difficult  to  obtain  manual  labor,  that  only  for- 
eigners can  now  be  secured  to  dig  ditches  and  do  hard 
labor,  and  that  the  State  is  going  too  far  with  its 
educational  process.  But  these  same  people  insist  on 
their  boys  having  an  education.  It  is  someone  else's 
boys  that  must  do  the  manual  labor.  AVho  is  to  decide 
whose  boys  shall  have  an  education  and  whose  boys 
shall  be  hewers  of  w^ood  and  drawers  of  water? 

In  1915  there  were  43,817  women  teaching  in  the 
public  schools  of  the  State  and  only  5,326  men  teaching 
in  the  public  schools.  Thus  nearly  nine-tenths  of  the 
public  school  teachers  of  the  State  are  women.  This 
is  interesting  when  we  recall  that  no  women  were 
employed  as  teachers  in  the  early  Dutch  schools  of 
the  colonial  period.  In  marked  contrast  the  early 
English  schools  of  the  colonial  period  did  employ 
women  teachers.  The  first  English  school  master  con- 
ducting a  school  in  New  York  was  William  Huddle- 
ston,  and  he  was  assisted  in  teaching  the  scholars  by 
his  wife,  Sarah  Huddleston.  After  the  death  of  her 
husband,  she  assisted  her  son,  Thomas  Huddleston,  in 
conducting  the  school,  and  after  the  death  of  her  son, 
she  managed  the  school  alone  for  over  six  months,  or 
until  Thomas  Noxon  was  appointed  schoolmaster. 

There  was  quite  a  demand  that  Mrs.  Huddleston  be 
appointed  schoolmistress  of  this  first  English  school 
and  a  petition  signed  by  sixty-eight  leading  citizens 
of  New  York  City  including  the  mayor,  president  of 
the  council,  aldermen,  justices,  lawyers  and  merchants 
was  sent  to  England  to  this  effect,  but  all  to  no  purpose. 
This  first  English  school  in  the  colony  was  at  one  time 
held  in  the  city  hall  of  New  York  City,  and  in  that 
city  William  Huddleston,  the  first  English  school- 
master in  the  colony,  taught  for  thirty^five  years. 
The  teaching  record  of  the  Huddleston  family,  father, 
son,  and  mother,  was  one  of  personal  sacrifice  and 
earnest  devotion  to  educational  uplift,  which  covered 
a  period  little  short  of  half  a  century. 


Public  Educatiox  59 

The  salaries  paid  the  teachers  of  the  public  schools 
of  the  State  are  entirely  inadequate.  No  servants  of 
the  State  do  more  and  receive  less  compensation  than 
the  public  school  teachers.  Good  public  schools  with 
well  qualified,  conscientious  teachers  will  result  in  a 
high  type  of  citizenship  constituting  the  State.  Under 
such  conditions  there  will  be  need  of  less  policemen 
and  criminal  courts.  AMiat  the  celebrated  English 
statesman,  John  Bright,  said  many  years  ago  is  still 
true  to-day: 

''  I  think  that  the  influence  of  a  good  man  or  a  good 
woman  teaching  ten  or  twelve  children  in  a  class  is 
an  influence  in  this  world,  and  the  world  to  come, 
which  no  man  can  measure,  and  the  responsibility  of 
which  no  man  can  calculate.  It  may  raise  and  bless 
the  individual.  It  may  give  comfort  in  the  family 
circle,  for  the  blessing  which  the  child  receives  in  the 
school  it  may  take  home  to  the  family.  It  may  check 
the  barbarism  even  of  the  nation. " 

In  1757  Johannis  Mutts  of  the  Precinct  of  Haver- 
straw,  in  what  was  then  the  County  of' Orange,  died 
and  directed  in  his  will  that  his  lands  and  possessions 
should  be  used  for  the  establishment  of  a  free  school 
for  the  poor  children  that  belong  to  the  Dutch  Church 
in  the  Precinct  of  Haverstraw.  Johannis  Mutts  was 
unable  to  read  or  write  and  he  signed  his  will  ^^^th  his 
mark,  but  he  had  an  appreciation  for  the  value  of  an 
education.  Yet  being  an  alien  his  property  after  his 
death  was  seized  by  John  Tabor  Kempe,  the  attorney 
general  of  the  New  York  colony,  as  an  escheat  to  the 
cro^\Ti  of  Great  Britain,  and  consequently  the  free 
school  for  the  poor  children  of  the  Dutch  Church  in 
the  Precinct  of  Haverstraw  was  never  established. 

Twenty-two  years  later  by  the  irony  of  fate  John 
Tabor  Kempe  had  his  own  property  confiscated  by 
the  State  government  and  he  himseif  was  attainted 
for  treason  and  banished  from  the  State  for  beino-  a 
loyalist  and  adhering  to  the  enemies  of  the  State. 


CHAPTER  V 

THE  LAISSEZ=FAIRE  PERIOD  OF  NEW  YORK 
HISTORY 

The  period  from  1842  to  1880  may  truly  be  called 
the  laissez-faire  period  of  New  York  history.  The 
State  withdrew  from  the  domain  of  internal  improve- 
ments and  left  the  field  open  to  private  capital  and 
initiative.  With  this  withdrawal  began  the  rise  of 
corporate  power.  The  few  feeble  attempts  of  the 
State  to  regulate  rates  on  railroads  were  soon  thrown 
off.  (State  regulations  were  regarded  as  a  check  and 
hindrance  to  progress.  There  were  marked  changes 
in  economic  conditions.  New  York 's  agriculture  began 
to  feel  the  competition  resulting  from  the  develop- 
ment of  western  agricultural  lands;  a  depression  of 
farm  values  began  and,  by  1880,  Ohio  had  wrested 
from  New  York  the  leadership  in  American  agricul- 
ture. 

Side  by  side  with  the  decline  of  agriculture,  there 
was  going  on  the  development  of  manufrcturing  indus- 
tries, wliich  by  1870  had  in  the  value  of  their  products 
surpassed  those  of  agriculture.  Manufacturing  indus- 
tries had  become  well  established  by  the  middle  of  the 
century,  and  the  development  which  followed  during 
the  next  few  decades  was  amazing.  All  eyes  were  now 
turned  away  from  the  State  as  an  aid  to  industrial 
enterprise,  and  attention  was  centered  upon  the  rising 
powers  of  manufactures  and  railroads.  The  State 
was  no  longer  needed  to  encourage  industries;  the 
industries  had  become  self-sufficient  and  all  powerful. 

During  this  laissez-faire  period  the  general  property 
tax  bore  all  the  burdens.  New  York  had  changed  from 
an  agricultural  tp  an  industrial  and  commercial  state, 
but  her  tax  system  had  remained  unchanged.  The  bur- 
den of  taxation  rested  upon  the  farmers  and  the  owTiers 

[60] 


Laissez-Faike  Period  of  New  York  History     61 

of  tangible  property  while  the  great  mass  of  indus- 
trial capital  escaped  taxation.  The  question  of  tax- 
ation was  becoming  more  and  more  a  troublesome 
problem. 

The  canal  craze  had  materially  abated,  although 
the  management  of  them  presented  many  difficulties. 
By  1859  the  receipts  from  canal  tolls  had  reached 
their  lowest  point,  being  not  sufficient  to  pay  the  sums 
required  for  the  sinking  fund  under  section  one  of  the 
constitution.  Some  advanced  the  proposition  of  sell- 
ing the  canals  and  paying  off  the  State  debt  in  view 
of  the  diminishing  revenues  and  the  necessity  for 
further  taxation.  But  it  was  feared  that  if  this  was 
done  the  canals  would  inevitably  fall  into  the  hands 
of  the  railroads,  rates  would  be  raised  to  the  highest 
limits  of  their  power  of  enforcement,  and  the  regula- 
tive benefit  of  the  canals  would  be  lost  forever. 

During  the  Civil  War  the  canal  tolls  increased  enor- 
mously on  account  of  the  closing  of  the  southern  ports 
and  the  stopping  of  trade  on  the  Mississippi  Valley. 
But  with  the  coming  of  peace  they  continued  to  decline 
and  by  a  constitutional  amendment  adopted  in  1882 
they  were  abolished  entirely. 

The  follo^^'ing  table  taken  from  the  "  History  of 
New  York  Canals  "  published  by  the  State  Engineer 
and  Surveyor  in  1906  shows  the  total  operation  of  all 
oanals  from  their  beginning  to  September  30,  1882 : 


Canaub 

Canal 
revenues 

Cost  of 
operating 

Loss  in 
Operatinii 

Profits  in 
operating 

$1,261 

301.099 

8.837 

1.054.356 

6,416.341 

525 . 565 

744.027 

45.049 

121.461.871 

860.165 

65,894 

3,708.548 

217.100 

7,770 

$18,039 

1.552.230 

994 

1.027.5.39 

5,630,023 

2,022,259 

2,081.739 

424.6,58 

29.270.301 

2.814.809 

144, 0<U 

3,371,446 

41,170 

20 

$16,778 
1.251,131 

Black  Rivar 

$7,843 

26,817 

786,318 

1.496,694 

1,337.712 

379.168 

92.191.570 

1,954,644 
78.167 

.337.102 

Oneida  Lake  Improvement 

Seneca  River  Towing  Path .... 

175.9.30 

7.750 

$135,418.-324 

$48,399,288 

$6,514,294 

$93,533,330 

62  Taxation  in  New  York 

The  above  table  shows  that  seven  canals,  the  Bald- 
winsville,  Black  River,  Chemmig,  Chenango,  Crooked 
Lake,  Genesee  Valley,  and  Oneida  Lake,  did  not  pro- 
duce revenue  enough  to  pay  operating  expenses. 
Outside  of  the  Black  River  Canal,  which  has  afforded  a 
permanent  and  ample  supply  of  water  to  the  Rome 
level  of  the  Erie  Canal,  these  canals  should  never  have 
been  constructed. 

From  now  on  the  canals  were  operated  as  economi- 
cally as  possible.  In  fact  so  little  was  done  to  keep 
them  in  repair  that  the  locks  and  other  wooden  parts 
began  to  rot  to  pieces,  the  canal  banks  were  constantly 
w^ashing  away,  and  the  canal  bottom  was  filling  up 
with  accumulated  silt. 

In  1876  commissioners  appointed  by  the  Legislature 
made  the  following  report  concerning  the  Chemung 
Canal :  ' '  That  the  structures  were  in  a  bad  condition 
and  would  require  large  expenditures  to  put  them  in 
a  safe  and  useful  state,  that  two  miles  of  the  route 
at  the  Elmira  end  had  already  been  abandoned,  the 
canal  at  that  time  terminating  in  an  open  field." 
Their  advice  was  to  have  the  canal  abandoned  and  the 
Legislature  provided  for  its  abandonment  at  the  close 
of  the  canal  season  of  1878. 

The  Crooked  Lake  Canal  was  officially  abandoned 
in  1877,  although  there  had  been  no  navigation  on  the 
canal  since  1875.  In  1887  the  Oneida  Lake  Canal  was 
abandoned.  In  1877  the  canal  commissioner  reported 
concerning  the  Chenango  Canal:  ''  This  rather 
*  worthless  ditch  '  has  been  a  source  of  much  per- 
plexity, and  an  expense  of  nearly  four  thousand  dol- 
lars for  about  six  weeks'  navigation,  in  October  and 
November  1876  .  .  .  There  was  no  navigation  upon 
this  canal  during  the  calendar  year  of  1877,  for  the 
reason  that  no  dependence  could  be  placed  on  the 
various  dilapidated  structure  holding  out  ...  It 
will  be  a  good  riddance  for  the  State  when  the  time 


Laissez-Faire  Period  of  New  York  History    63 

arrives  for  the  sale  of  what  is  left  of  the  old  Chenango 
Canal."  In  view  of  this  recommendation  it  did  not 
take  the  Legislature  long  to  act,  and  the  Chenango 
Canal  was  abandoned  in  1878. 

The  Genesee  Valley  Canal  had  been  constructed  with 
the  idea  of  providing  an  unbroken  inland  water  com- 
munication between  the  important  sections  of  New 
York  and  the  Mississippi  Valley  by  means  of  the 
Genesee  and  Allegany  Rivers.  But  neither  the  State 
of  Pennsylvania  nor  the  United  States  government 
carried  out  their  alleged  plans  of  improving  the 
Allegany  River,  so  that  the  original  scheme  of 
drawing  trade  from  the  Ohio  and  the  other  great 
rivers,  to  Avhich  its  waters  afforded  access,  was 
destroyed.  Pennsylvania  did  not  wish  to  further  New 
York's  interest  in  this  way,  for  she  now  had  means  of 
transporting  goods  from  Pittsburg  to  the  coast  without 
permitting  any  other  state  to  reap  the  advantages  of 
their  transportation.  The  Genesee  Valley  Canal 
traversed  a  country  of  floods  and  it  required  large 
expenditures  for  maintenance  and  repair.  As  it  never 
paid  operating  expenses  it  was  abandoned  by  an  act 
of  the  Legislature  September  30,  1878. 

There  are  many  conflicting  statements  as  to  whether 
the  canals  ever  paid  for  their  cost  of  construction  and 
maintenance.  The  iState  Engineer  and  Surveyor  in 
his  *'  History  of  New  York  Canals  "  states  that  they 
did  pay  for  themselves  and  also  turned  into  the  State 
treasury  the  sum  of  over  eight  million  dollars  besides. 
But  Charles  Zebina  Lincoln  in  his  "  Constitutional 
History  of  New  York  "  states  that  the  canals  did  not 
pay  for  themselves,  but  were  a  loss  to  the  State  of  over 
thirty-four  million  dollars.  Both  obtain  their  data 
from  the  report  of  John  A.  Place,  Canal  Auditor  in 
1882,  who  submits  the  total  receipts  and  expenditures 
of  the  canals  from  their  inception  in  1817  down  to  the 
abolishment  of  the  canal  tolls  in  1882. 


64  Taxation  in  New  York 

The  following  summary  taken  from  this  same  report 
of  John  A.  Place  indicates  a  loss  of  over  twenty-three 
million  dollars : 

Receipts. 

Avails  of  loans $70,534,004  40 

Less  loans  repaid. . .     59,158,658  81 

$11,375,345  59 

Canal  tolls 134,566,107  77 

Sales  of  land 320,518  15 

Interest  on  deposits,  etc 6,068,951  13 

Rent  of  surplus  water 138,823  73 

Miscellaneous    2,939,442  44 


$155,409,188  81 


Expenditures. 

Premium  on  stock $743,611  02 

Interest  on  loans 47,246,868  39 

Canal  commissioners,  etc 84,043,752  21 

Seneca  Lock  Navigation  Company. .  53,871  88 

Purchase  of  Oneida  Lake  Canal 50,000  00 

Contractors   8,147,809  10 

Superintendents   28,080,850  67 

Collection  and  inspection ^  . .  3,074,672  57 

Weighmasters 407,519  75 

Miscellaneous    7,138,049  10 


$178,987,004  69 


Excess  of  expenditures  over  receipts      $23,577,815  88 


After  the  Civil  War  the  State  went  to  the  other 
extreme  of  granting  very  small  appropriations  for  the 
canals.  If  the  State  was  very  lavish  in  its  expenditures 
for  the  canals  in  the  thirties  and  forties,  it  was  very 
niggardly  in  its  expenditures  during  the  seventies  and 
eighties.     Governor   Samuel   Jones    Tilden's    annual 


Laissez-Faire  Period  of  New  York  History    65 

message  to  the  Legislature  in  1876  recommended 
retrenchment  in  canal  management.  iState  Engineer 
and  Surveyor  iSilas  iSeymour  in  his  report  for  1883 
said  that ' '  It  was  a  forgone  and  inevitable  conclusion 
that  the  canals  must  go. ' ' 

At  last  it  was  felt  that  something  had  to  be  done  in 
the  way  of  improvement  to  the  remaining  canals  that 
in  view  of  the  decreasing  tonnage  that  was  passing 
thru  them  and  the  ruinous  competition  of  the  rail- 
roads they  would  close  of  themselves.  In  1895  the 
people  voted  an  appropriation  of  nine  million  dollars 
for  improvements  to  the  canals,  but  this  was  only  an 
improvement  of  a  temporary  character.  Finally  in 
1903  the  people  voted  an  appropriation  of  one  hun- 
dred and  one  million  dollars  known  as  the  Barge  Canal 
Act.  It  provided  for  a  new  canal  in  place  of  the  Erie 
Canal  to  be  seventy-five  feet  wide  at  the  bottom,  twelve 
feet  deep,  and  at  least  one  thousand  one  hundred 
twenty-eight  feet  of  water  cross  section.  This  money 
was  to  be  raised  by  the  issuance  of  eighteen-year  bonds. 
In  1909  the  people  voted  an  appropriation  seven 
miUion  dollars  to  be  raised  by  a  bond  issue  for  the 
transformation  of  the  Cayuga  and  Seneca  Canal  into  a 
barge  canal.  It  is  too  early  yet  to  say  what  the  result 
of  these  improvements  to  the  canal  system  of  the  iState 
will  be,  but  it  is  hoped  they  will  work  out  for  the  best 
interests  of  the  iState.  There  is  a  better  financial  plan 
under  which  these  latter  improvements  are  being 
carried  out;  for  the  people  have  profited  by  their 
sad  experiences  of  the  early  forties. 

In  1917  the  total  tonnage  passing  through  the  canals 
of  the  State  was  1,297,225,  the  lowest  tonnage  since 
1842,  when  it  was  1,236,931.  Altho.  the  new  barge 
canal  is  practically  completed  the  tomiage  passing 
thru  New  York's  canals  continues  to  decline. 

During   this    laissez-faire   period   of   New   York's 
history  the  State  had  changed  from  an  agricultural  to 
an  industrial  and  commercial  coimnonwealth,  but  its 
3 


66  Taxation  in  New  Yoek 

taxation  system  was  still  that  of  the  general  property 
tax.  At  the  fourth  National  Tax  Conference  held  at 
Milwaukee  in  1910  a  report  was  adopted  relative  to 
the  failure  and  break  down  of  the  general  property  tax 
thruout  the  whole  United  States. 

In  a  primitive  democratic  community  the  simplest 
way  to  reach  the  taxable  ability  of  the  individual  is 
thru  his  property.  In  an  agricultural  commonwealth 
the  general  property  tax  is  a  satisfactory  index  of 
relative  taxable  faculty  because  the  property  is  homo- 
geneous. To  tax  the  individual  and  to  tax  the  prop- 
erty of  the  individual  is  virtually  the  same  thing.  But 
when  New  York  became  an  industrial  and  commer- 
cial State,  property  was  no  longer  homogeneous. 
With  the  development  of  commerce  and  industry  on 
a  vast  scale,  property  split  up  into  all  sorts  of  forms 
and  the  old  homogeneity  disappeared.  It  became  prac- 
tically impossible  to  reach  all  forms  of  property 
equally.  All  property''  can  not  be  taxed  alike,  because 
it  is  humanly  impossible  under  modern  conditions  to 
reach  all  property  alike. 

The  cost  of  State  government  was  rapidly  increas- 
ing as  sho"v\ni  by  a  studj^  of  the  iState  tax  rates.  The 
highest  tax  rate  known  in  the  history  of  the  State  was 
in  1872  when  the  State  tax  rate  was  nine  and  three- 
eighths  mills  on  one  dollar  of  property.  The  State 
began  looking  around  for  new  sources  of  revenue.  It 
came  in  1880  when  the  first  State  tax  on  corporations 
was  imposed. 

The  only  officers  provided  for  in  the  constitution  of 
1777  were  governor,  lieutenant  governor,  chancellor, 
justice  of  the  supreme  court,  and  treasurer.  The 
governor  received  $3,000,  and  each  of  the  other  officers 
received  $1,250  a  year.  From  time  to  time  other 
officers  were  added.  Their  salaries  were  fixed  by  law 
in  the  annual  appropriation  bill,  and  while  they  varied 
slightly  from  year  to  year,  yet  they  remained  exceed- 
ingly small.     In   1840  the  governor  receivel  $4,000, 


Laissez-Faiee  Peeiod  of  New  Yoek  Histoey     67 

the  controller  $2,500,  the  treasurer  $1,500,  the  adjutant 
general  $800,  and  the  office  expenses  of  these  depart- 
ments varied  from  $100  to  $500.  In  1798  the  expenses 
of  the  judiciary  amounted  to  $7,596,  less  than  the 
salary  of  one  supreme  court  justice  at  the  present 
time.  This  amount  grew,  until  by  1842  the  expen- 
ditures for  the  judiciary  exceeded  that  for  either  the 
Legislature  or  the  administrative  offices. 

In  1789  the  members  of  the  Legislature  received 
twelve  shillings  per  day  and  traveling  expenses  at  the 
rate  of  thirty  miles  per  day.  The  State  constitution 
adopted  in  1821  provided  the  compensation  paid  should 
not  exceed  $3.00  per  day.  The  same  provision  was 
retained  in  the  State  constitution  of  1846,  which  pro- 
\dded  that  the  aggregate  compensation  should  not 
exceed  $300  and  $1  was  allowed  for  every  ten  miles 
traveled.  In  1874  an  amendment  to  the  iState  constitu- 
tion was  adopted  which  fixed  the  salary  of  the  mem- 
bers of  the  Legislature  at  $1,500  a  year  and  $1  was 
aUow^ed  for  every  ten  miles  traveled.  This  section  has 
remained  unchanged  to  the  present  time. 

In  the  early  days  it  was  customary  to  extend  relief 
to  widows  and  families  of  deceased  public  officials,  but 
this  policy  apparently  is  no  longer  in  vogue.  Gradually 
new  offices,  commissions  and  bureaus  have  been  insti- 
tuted, and  the  expenses  of  the  State  have  been  mount- 
ing upwards.  In  fact  the  State  government  is  becom- 
ing more  and  more  the  government  of  a  bureauocracy. 

The  State  passed  thru  the  greatest  war  in  the  his- 
tory of  our  country  during  this  period  and  it  is  worth 
while  to  note  what  New  York  did  during  the  Civil 
War.  During  the  course  of  the  war  the  State  is 
credited  with  having  furnished  448,850  men,  about 
half  the  male  population  between  the  ages  of  eighteen 
and  forty-five,  and  with  having  spent  over  fourteen 
million  dollars  from  her  own  funds. 

A  far  more  important  cost  of  the  war  was  the  amount 
spent  by  counties,  cities,  towns  and  villages  of  the 


68  Taxation  in  New  York 

State.    An  investigation  made  by  the  bureau  of  mili- 
tary records  in  1868  disclosed  the  following  facts : 

In  the  47  counties  which  rendered  full 

reports  amount  spent  was $58,523,509  01 

In  the  12  counties  which   rendered 

incomplete   reports   amount   spent 

was    7,404,447  50 

In  the  5  cities  which  rendered  incom- 
plete reports  amount  spent  was . . .  2,694,666  27 
In  the  771  to^^^lS  wliich  rendered  full 

reports  amount  spent  was 32,265,128  95 

In   the    132    towns   which   rendered 

incomplete   reports   amount   spent 

was    4,142,991  60 


$105,030,743  33 


This  vast  expenditure  of  money  by  the  subdivisions 
of  the  State  was  for  bounties,  fees  and  expenses,  inter- 
est on  loans,  and  for  the  support  of  the  families 
of  soldiers.  It  proves  conclusively  that  at  no  time  in 
the  history  of  the  commonwealth  was  the  people  more 
patriotic  than  during  the  Civil  War. 

The  national  guard  was  organized  in  1861.  All  male 
citizens  between  the  ages  of  eighteen  and  forty-five 
constitute  the  militia  of  the  State.  Down  to  1870  all 
those  not  belonging  to  the  uniformed  militia  or 
national  guard  constituted  the  reserve  militia.  All 
members  of  the  reserve  militia  were  obliged  to  assem- 
ble on  the  first  Monday  of  September  in  each  year  for 
parade  and  inspection  armed  and  equipped  at  their 
own  expense.  Those  failing  to  appear  were  subject 
to  a  fine  of  $1.  This  was  called  general  training  day. 
Thus  for  nearly  one  hundred  years  New  York  State 
had  universal  military  training.  The  last  year  the 
commutation  fines  were  collected  was  in  1860  when  the 
sum  of  $33,621  was  collected  from  those  failing  to 


Laissez-Faiee  Period  of  New  York  History     69 

appear  at  the  general  training  day.  The  Legislature 
of  1863  remitted  the  fine  of  one  dollar  for  non-attend- 
ance at  the  general  training  day  in  September,  1862, 
and  also  provided  that  the  annual  general  training 
day  in  September,  1863,  should  be  dispensed  with.  No 
more  general  training  days  were  held  in  the  State,  but 
the  system  was  not  finally  abolished  by  the  Legislature 
until  1870.  The  general  training  day  gradually  petered 
out  and  as  early  as  1840  Governor  William  Henry 
Sew^ard  in  his  annual  message  to  the  Legislature  that 
year  spoke  of  the  general  training  day  as  follows : 

' '  It  is  manifest  that  the  militia  system  has  lost  some 
of  the  popular  respect  with  which  it  was  once  regarded. 
...  At  present  the  rich  and  the  fortunate  evade  in 
a  great  degree  the  performance  of  military  duty,  while 
its  expenses  and  sacrifices  fall  without  abatement  upon 
those  members  of  society  w^ho  are  least  able  to  bear 
them. ' ' 

Even  in  1860,  the  last  year  the  commutation  fines 
were  collected  for  non-attendance  at  the  general  train- 
ing day,  eleven  counties  of  the  State  failed  to  collect 
any  fines  at  all.  In  the  early  history  of  the  State 
nearly  all  the  male  citizens  were  familiar  with  and  had 
handled  a  gun  from  boyhood  up,  so  that  a  general 
training  day  once  a  year  probably  was  all  that  was 
needed.  But  at  present  most  of  our  citizens  are  not 
familiar  with  firearms,  and  a  general  training  day  once 
a  year  would  not  cover  the  needs  of  universal  military 
training. 

From  1789  to  1819  the  State's  fiscal  year  coincided 
with  the  calendar  year.  In  1819  the  fiscal  year  was 
changed  to  end  November  30th.  In  1831  it  was 
changed  to  end  Septeml)er  30th,  and  in  1916  it  was 
again  changed  to  end  June  30th.  There  is  not  the 
uniformity  there  should  be  as  to  ending  of  the  fiscal 
year  of  the  State  and  its  political  subdivisions.  The 
school  year  ends  July  31st.  Most  cities  close  their  fiscal 
year    December   31st.     Villages    unless    incorporated 


70  Taxation  in  New  York 

under  a  special  act  close  their  fiscal  year  February 
28th.  Counties  close  their  fiscal  year  December  31st; 
while  towns  have  no  definite  time  for  closing  their 
fiscal  year.  It  is  impossible  with  all  this  confusion  of 
fiscal  years  to  so  group  /States  taxes,  county  taxes, 
city  taxes,  village  taxes  and  school  taxes  so  as  to  cover 
the  same  period  of  time. 

Up  to  1797  the  accounts  of  the  State  Avere  kept  in 
pounds,  shillings  and  pence,  but  in  that  year  an  act 
was  passed  requiring  them  to  be  kept  in  dollars  and 
cents.  For  reducing  these  early  figures  to  dollars  and 
cents  a  ratio  was  deducted  from  figures  found  in  the 
legislative  documents  of  the  period,  and  the  ratio  thus 
obtained  was  that  one  pound  equals  $2.50,  or  one 
dollar  is  worth  about  eight  shillings. 

The  constitution  of  1777  gave  the  right  of  suffrage 
only  to  freeholders  who  o^^med  property  worth  twenty 
pounds  or  paid  twenty  shillings  a  month  rent  and  who 
had  been  rated  and  actually  paid  taxes  in  the  State. 
The  qualification  for  voters  under  the  second  constitu- 
tion adopted  in  1821  were :  A  period  of  residence,  the 
performance  of  military  service  and  the  payment  of 
road  taxes.  Colored  men  were  required  to  own  and 
to  have  paid  taxes  upon  $250  worth  of  property  in 
order  to  vote.  It  was  not  until  the  fifteenth  amendment 
to  the  United  States  constitution  was  adopted  in  1870 
that  colored  men  not  owning  property  were  given  the 
right  of  suffrage  in  New  |York  State.  An  amendment 
to  the  constitution  adopted  in  1917  extended  the  right 
of  suffrage  to  women.  The  last  vestige  of  slavery  in 
the  State  vanished  mtli  the  emancipation  of  July  4, 
1827. 

From  1789  to  1795  bounties  were  paid  upon  hemp. 
Two  thousand  dollars  were  given  away  in  premiums 
on  woolen  cloth  in  1808,  and  later  bounties  were 
extended  to  the  manufacture  of  broadcloth.  From 
1840  to  1845  bounties  were  paid  on  salt  exported  out 
of  the  State.    In  1821  the  State  paid  $22,659  as  boun- 


Laissez-Faire  Period  of  New  York  History     71 

ties  for  the  destruction  of  wolves  and  other  wild 
animals.  At  that  time  a  bounty  of  twenty  dollars  was 
paid  on  every  full  grown  wolf,  and  the  county  in  which 
the  wolf  was  killed  paid  an  equal  amount.  Bounties 
paid  by  the  State  for  the  destruction  of  these  wild 
animals  must  have  cost  the  State  thousands  of  dollars 
in  the  early  days.  The  last  of  the  bounty  system  was 
the  sum  of  one  cent  a  pound  given  by  the  State  to 
encourage  the  beet  sugar  industry  in  the  State.  The 
first  bounty  for  this  purpose  was  paid  in  1898  and  the 
last  payment  was  in  1908.  During  the  ten  years  this 
bounty  act  was  in  force  the  State  paid  in  bounties  the 
sum  of  $499,132  to  try  and  develop  the  sugar  beet 
industry  in  New  York.  Climatic  conditions  were 
responsible  for  the  failure  of  this  industry  in  this 
commonwealth.  If  statistics  had  been  gathered  as  to 
New  York's  climatic  conditions  this  waste  of  money 
could  have  been  avoided. 

It  was  not  until  1831  that  imprisonment  for  debt  was 
done  away  with  in  this  State.  In  Governor  Enos 
Thompson  Throop's  message  to  the  Legislature  of  that 
3^ear  was  the  following :  ' '  The  notion  of  imprisonment 
in  the  nature  of  punishment  for  debt  is  repugnant  to 
humanity,  and  condemned  by  wisdom. ' ' 

The  most  complete  census  ever  taken  by  the  State 
was  the  census  of  1845.  According  to  this  census  there 
were  6,443,855  sheep  in  New  York  State  at  that  time. 
To-day  there  are  less  than  five  hundred  thousand  sheep 
in  the  State,  yet  the  .State  is  just  as  large  as  it  was 
seventy-three  years  ago  and  on  account  of  its  hilly, 
mountainous  character  is  well  adapted  for  sheep  rais- 
ing. The  only  answer  is  the  depredation  of  dogs.  The 
State  council  of  farms  and  markets  reports  that  during 
six  months  from  July  1,  1917,  to  December  1,  1917, 
there  were  12,692  sheep  in  this  State  bitten  by  dogs. 

According  to  Lewis  Penwell,  chief  of  the  wool  divi- 
sion of  the  war  industries  board  at  Washington,  it 
takes  seventy-one  pounds  of  scoured  wool  to  equip  one 


72  Taxation  in  New  Yokk 

soldier.  This  means  the  wool  of  twenty  sheep.  The 
United  States  government  estimates  the  present  pro- 
duction of  wool  in  this  country  to  be  two  hundred  and 
eighty  million  pounds  of  grease  wool,  and  for  army, 
na^^^,  marine  and  semi-governmental  purposes  the 
government  will  need  for  the  fiscal  year  ending  June 
30,  1919,  the  sum  of  two  hundred  eighty-three  million 
and  five  hundred  thousand  pounds  of  scoured  wool.  It 
can  readily  be  seen  therefore  that  there  is  no  wool  for 
the  civilian  population  of  our  country. 

The  sheep  is  the  most  important  domestic  animal 
we  have.  Without  its  wool  we  would  practically 
have  no  clothes  to  wear  and  would  have  to  go  naked. 
In  what  way  other  than  as  ingrates  must  we  charac- 
terize those  people  who  appropriate  the  sheep's  wool 
for  their  clothing  yet  will  not  lift  a  finger  for  the  pro- 
tection of  the  sheep  from  the  depredations  of  dogs. 
In  the  celebrated  words  of  Joseph  H.  Manley  of  Maine, 
spoken  during  the  pre-convention  period  of  1896: 
*'  God  Almighty  hates  an  ingrate." 

Perhaps  the  laissez-faire  period  of  New  York's  his- 
tory is  well  typified  by  a  recommendation  contained 
in  the  annual  message  to  the  Legislature  of  Governor 
Lucius  Robinson  in  1879  in  which  he  asked  for  the 
abolishment  of  the  State  insurance  and  banking 
departments.     He  said: 

''All  experience  has  shown  that  every  branch  of 
business  is  most  successfully  conducted  when  left  to 
the  management  of  those  who  understand  it,  with  their 
hands  as  free  from,  and  uutranuneled  by,  legislative 
interference,  as  practicable." 


CHAPTER  VI 
NEW  SOURCES   OF  STATE  REVENUE 

Down  to  1823  the  State  took  no  cognizance  of  cor- 
porations for  taxation  purposes.  In  the  general  tax 
law  enacted  by  the  Legislature  in  1823  it  was  provided 
that  all  incorporated  companies  recei\ing  a  regular 
income  from  the  employment  of  capital  were  defined 
as  persons  and  were  to  be  assessed  and  taxed  in  the 
same  manner  as  individuals.  The  proper "  officer  of 
the  company  was  to  pay  the  tax,  and  deduct  it  from 
the  dividends  of  stockholders  in  proportion  of  the 
amount  of  stock  held  by  each.  The  tax  might  be  com- 
muted into  an  income  tax,  if  the  company  so  desired,  by 
a  direct  payment  into  the  county  treasury  of  ten  per 
cent,  of  all  dividends,  profits  or  income,  in  lieu  of  any 
tax  levied  upon  the  property. 

This  attempt  to  treat  corporations  as  individuals 
led  to  some  amusing  incidents.  The  Bank  of  Ithaca 
was  notified  by  Road  Commissioner  Samuel  King  to 
appear  at  eight  o'clock  on  the  morning  of  October  2, 
1833,  to  work  forty-nine  days  on  the  highways.  The 
bank  did  not  appear,  either  in  person  or  by  substitute, 
nor  did  it  proffer  a  commutation  payment.  The  bank 
was  fined  by  a  justice  of  the  peace  $49,  whereupon  the 
bank  carried  the  case  to  the  .Supreme  Court,  which 
decided  that  a  corporation  had  no  corporeal  body  and 
no  material  existence,  and  that  it  was  incapable  of 
performing  labor.  Hence  it  was  not  liable  to  assess- 
ment to  work  on  a  highway.  The  Legislature  now  took 
a  hand  in  the  matter  and  enacted  a  statute  which  pro- 
vided that  the  commissioner  of  highways  was  to  appor- 
tion all  moneyed  or  stock  corporations  appearing  upon 
the  last  assessment  roll  of  the  town  among  the  inhab- 
itants who  were  compelled  to  work  on  the  highways, 
and  such  corporations  were  required  to  work  on  the 

[73] 


74  Taxation  in  New  York 

highway  a  certain  number  of  days  not  exceeding  fifty 
days.  The  same  commutation  was  allowed  corpora- 
tions as  was  allowed  individuals,  namely,  paying  sixty- 
two  and  one-half  cents  for  each  day.  Corporations 
were  thus  re-established  as  persons,  even  for  worldng 
on  the  highways. 

In  1853  the  statute  of  1823  was  amended  so  that  cor- 
porations in  commuting  their  property  tax  into  an 
income  tax  were  to  pay  a  tax  of  five  per  cent,  of  their 
net  profits  or  income  when  such  net  profits  or  income 
did  not  equal  five  per  cent,  of  the  capital  stock.  Other- 
wise corporations  were  to  be  assessed  by  local  assess- 
ors upon  their  real  estate  and  upon  their  personal 
property,  the  last  to  be  computed  as  follows:  The 
capital  stock  of  the  corporation  together  with  its  sur- 
plus profits  or  reserve  funds  exceeding  ten  per  cent, 
of  the  capital  less  the  real  estate  value.  In  1857  the 
commutation  privilege  was  abolished.  The  statute  of 
1857  is  now  Section  12  of  Article  1  of  the  tax  law. 
It  has  been  called  the  most  ambiguous  tax  statute  in 
the  United  States.  The  Court  of  Appeals  has  described 
the  section  as  follows : 

'^  There  is  a  most  extraordinary  confusion  of  ideas 
in  the  section.  .  .  .  "  And  again : ' '  Its  interpreta- 
tion has  met  some  difficulty  of  solution  by  the  very 
bungling  and  confused  manner  in  which  the  statute  is 
worded. ' ' 

It  would  seem  to  be  the  duty  of  the  Legislature  to 
clarify  the  meaning  of  Section  12  of  the  tax  law  and 
make  it  intelligible  to  both  assessors  and  corporations, 

CORPORATION  TAXES 

In  1880  the  first  State  tax  on  corporations  was 
imposed  in  this  State.  Pennsylvania  had  been  collect- 
ing taxes  from  corporations  for  many  years  and  since 
1866  had  had  no  tax  on  real  estate  for  State  purposes. 
New  York  modeled  her  first  system  of  State  taxes  on 


New  Sources  of  State  Eevenue  75 

corporations  from  that  of  her  sister  state,  Pennsyl- 
vania. The  receipts  from  these  taxes  the  first  year 
were  only  $141,127;  but  the  State  Controller  in  his 
annual  report  thought  that  the  time  would  come  when 
they  would  yield  two  million  dollars  a  year  in  revenue. 
They  now  yield  over  thirteen  million  dollars  a  year 
in  revenue,  and  from  their  beginning  in  1880  down  to 
and  including  1917  the  State  has  collected  $182,098,422 
from  State  taxes  on  corporations. 

New  York's  first  State  taxes  on  corporations  were 
taxes  both  upon  the  capital  stock  and  upon  the  gross 
earnings.  The  tax  upon  the  capital  stock,  which  has 
been  amended  several  times,  is  now  Section  182  of  the 
tax  law.  At  first  it  exempted  banks,  savings  banks, 
trust  companies,  insurance  companies,  foreign  com- 
panies and  manufacturing  companies.  Foreign  com- 
panies were  brought  under  the  provisions  of  the  law  in 
1885  by  being  assessed  upon  the  amount  of  capital  stock 
employed  within  the  State.  As  originally  enacted  the 
tax  was  to  be  computed  as  follows:  If  the  dividends 
amounted  to  six  per  cent,  or  more  upon  the  par  value 
of  the  stock,  the  tax  was  to  be  one-fourth  of  a  mill  for 
each  per  cent,  of  dividends  so  made.  If  there  were  no 
di\ddends,  or  if  they  were  less  than  six  per  cent.,  then 
the  tax  was  to  be  one  and  one-half  mills  per  dollar  on 
the  valuation  of  the  stock.  Should  a  part  of  the  stock 
pay  more  than  six  per  cent,  dividends,  this  was  to  be 
taxed  at  the  one-fourth  mill  rate,  while  the  rest,  if  its 
dividends  were  less  than  six  per  cent.,  was  to  be  taxed 
at  the  other  valuation. 

In  1886  an  organization  tax  was  enacted  providing 
that  for  the  purpose  of  incorporating  within  the  State 
corporations  were  to  pay  a  tax  of  one-eighth  of  one 
per  cent,  upon  the  amount  of  their  capital  stock.  This 
rate  was  reduced  in  1901  to  one-twentieth  of  one  per 
cent. 

The  gross  earnings  tax  upon  transportation  com- 
panies, which  was  first  enacted  in  1880,  is  one-half  of 


76  Taxation  in  New  York 

one  per  cent.  It  includes  steam  railroads,  express 
companies,  pipe  line  companies,  steamboat  companies, 
and  palace  and  sleeping  car  companies.  In  1881  tele- 
phone and  telegraph  companies  were  also  included  with 
a  tax  of  one-half  of  one  per  cent,  on  their  gross  earn- 
ings. Then  in  1896  elevated  railroads  and  surface 
street  railroads  were  taxed  at  the  rate  of  one  per  cent. 
on  their  gross  earnings. 

Light,  water  and  power  companies  were  first  taxed 
by  the  State  in  1896.  The  rate  is  one-half  of  one  per 
cent,  upon  their  gross  earnings  and  also  three  per  cent, 
on  dividends  when  dividends  are  in  excess  of  four  per 
cent,  of  their  paid  up  capital. 

Life  insurance  companies  were  taxed  one  per  cent, 
on  premiums  by  an  act  of  1880.  This  law  was  repealed 
in  1887,  but  re-enacted  in  1905.  The  present  tax 
on  insurance  companies  is  somewhat  complicated. 
Domestic  insurance  companies,  that  is  fire,  life  and 
marine,  under  the  corporation  tax  law  pay  a  tax  at 
the  rate  of  one  per  cent,  of  their  premiums;  but  life 
insurance,  health  and  casualty  companies  of  foreign 
countries  pay  a  tax  under  the  insurance  law  of  two 
per  cent,  of  their  premiums;  and  fire  and  marine 
insurance  companies  of  other  states  of  the  United 
States  pay  a  tax  under  the  insurance  law  of  two  per 
cent,  of  their  premiums,  while  similar  companies  of 
foreign  countries  pay  a  tax  under  the  insurance  law 
of  one-half  of  one  per  cent  of  their  premiums  to  the 
State  Treasurer  and  in  addition  two  per  cent,  to  the 
local  fire  department  or  State  Superintendent  of 
Insurance  respectively. 

The  propriety  of  a  tax  on  life  insurance  companies 
is  often  discussed.  Life  insurance  companies  or  at 
least  mutual  life  insurance  companies  are  not  profit 
making  organizations.  A  tax  on  them  is  really  a  tax 
on  thrift  and  foresight.  For  life  insurance  companies 
are  primarily  a  means  of  co-operation  to  distribute 
the  cost  of  providing  for  dependent  widows  and  chil- 


New  Sources  of  State  Revenue  77 

dren  and  of  saving  a  fund  for  old  age.  But  in  answer 
it  can  be  said  that  modern  life  insurance  is  often  util- 
ized as  a  safe  means  of  investment  as  well  as  insur- 
ance against  death.  Other  investments  are  taxed,  why 
not  these  investments? 

As  long  as  the  general  test  is  the  ability  to  pay,  it  is 
impracticable  to  avoid  the  taxation  of  thrift.  It  is 
true  such  a  tax  may  discourage  thrift.  But  a  system 
of  taxation  which  tries  to  penalize  waste  and  thrift- 
lessness  and  to  reward  thrift  and  industry  ^yi[l  break 
down,  because  the  more  it  succeeds  the  less  revenue 
will  it  yield.  All  capital  is  the  result  of  saving,  and 
capital  will  continue  to  pay  most  of  the  taxes. 

Savings  banks  were  first  taxed  by  the  State  in  1901. 
This  is  a  tax  of  one  per  cent,  on  their  surplus  and 
undivided  earnings.  When  this  tax  was  first  imposed 
it  was  freely  predicted  that  great  hardship  would  ensue 
and  the  familiar  argTiment  was  made  that  the  tax 
was  le\ded  upon  the  savings  of  the  poor.  These 
alarmists  were  mistaken.  The  rate  of  dividends  has 
remained  four  per  cent,  in  nearly  all  savings  banks  of 
the  State.  Many  other  states  tax  not  only  the  surplus 
of  savings  banks,  but  tax  the  deposits  in  savings  banks 
as  well.  In  New  York  savings  bank  deposits  have  been 
exempt  from  taxation  since  1857.  New  York's  special 
tax  commission  of  1906,  appointed  to  study  the  State's 
system  of  taxation  and  advise  methods  of  improvement, 
recommended  among  other  things  that  sa\4ngs  bank 
deposits  of  over  $1,000  should  be  taxed.  The  1898 
annual  report  of  the  State  Tax  Commission  cited  a 
case  where  a  depositor  testified  under  oath  before  a 
board  of  assessors  that  he  had  $53,875  deposited  in 
various  savings  banks  of  the  State  and  consequently 
escaped  paying  any  tax  upon  it  whatsoever. 

The  tax  on  trust  companies,  and  also  upon  State  and 
national  banks,  which  was  imposed  in  1901,  is  one  per 
cent,  on  the  amount  of  their  capital  stock,  surplus  and 
undivided  profits.     With  trust  companies  the  receipts 


78  Taxation  in  New  Yoek 

go  to  the  State,  but  with  State  and  national  banks  the 
receipts  go  to  the  localities.  This  tax  exempts  these 
institutions  from  a  local  personal  assessment. 

In  1880  foreign  bankers  were  to  pay  a  tax  of  one- 
half  of  one  per  cent,  on  the  average  of  all  sums  of 
money  used  in  the  State  during  the  year.  In  1900 
the  law  was  changed  so  that  foreign  banks  have  to 
pay  a  tax  of  five  per  cent,  on  the  interest  of  moneys 
loaned  or  employed  Avithin  the  State. 

This  system  of  taxation  of  corporations  in  this  State 
is  complicated  and  should  be  simplified.  They  are 
described  in  the  tax  statutes  as  franchise  taxes. 
Franchise  is  a  very  elusive  word,  but  no  one  has  given 
a  better  definition  than  Professor  Edwin  Robert 
Anderson  Seligman  of  Columbia  University,  who  says 
that  '*  a  franchise  is  the  right  conferred  by  government 
of  conducting  an  occupation  either  in  a  particular  way 
or  accompanied  with  particular  privileges."  In  trac- 
ing the  historical  development  of  franchise  it  is  always 
found  associated  with  privilege.  In  mediaeval  Europe 
one  of  the  chief  sources  of  royal  income  consisted  of 
the  so  called  fines  for  licenses,  concessions  and  .fran- 
chises. Franchises  were  payments  by  individuals 
or  associations  for  all  kinds  of  special  privileges. 
Some  of  these  privileges  or  franchises  were  the  right 
to  conduct  some  business  in  a  particular  way,  the 
right  of  exporting  commodities,  the  right  to  retain 
or  to  quit  office,  and  the  right  to  the  general  favor  of 
the  crown.  A  franchise  of  an  individual  or  of  a  cor- 
poration Is,  therefore,  simply  a  privilege  —  something 
over  and  above  the  value  of  the  property.  As  the 
State  grants  to  corporations  privileges  or  franchises 
it  has  a  right  to  place  a  tax  on  these  privileges  or 
franchises. 

Whether  these  corporation  taxes  should  be  upon  the 
gross  or  net  earnings  is  difficult  to  determine.  A  tax 
on  gross  earnings  is  easily  ascertained  and  is  not 
susceptible  of  evasion.     But  if  ability  to  pay  is  the  test, 


New  Sources  of  State  Revenue  79 

then    the    earning    capacity    of    the    corporation    as 
evidenced  by  its  net  earnings  is  the  best  rule. 

The  author  believes  that  taxes  upon  corporations  are 
shifted  from  the  corporation  with  increased  costs  to  the 
consumer  and  that  it  w^ould  be  cheaper  for  the  con- 
sumer to  pay  the  tax  in  the  first  place  to  the  govern- 
ment thru  an  income  tax. 

INHERITANCE  TAXES 

The  first  inheritance  tax  law  in  this  country  was 
enacted  by  Pennsylvania  in  1826.  The  first  federal 
inheritance  tax  law  was  enacted  in  1862,  but  was 
repealed  when  internal  taxation  was  reduced  after  the 
Civil  War.  During  the  Spanish-American  War 
another  federal  inheritance  tax  law  was  enacted,  which 
was  subsequently  repealed.  However,  in  1916  the 
federal  government  enacted  a  new  federal  inheritance 
tax  law  in  a  time  of  peace  and  probably  this  law  mil 
remain  in  force  from  now  on.  According  to  the  United 
States  census  bulletin,  taxation  and  revenue  systems 
of  State  and  local  governments,  thirty-nine  state  of  the 
Union  had  inheritance  taxes  in  1912. 

New  York  enacted  its  first  inheritance  tax  law  in 
1885.  This  law  exempted  the  immediate  relatives  of 
the  deceased,  such  as  father,  mother,  husband,  wife, 
children,  brother  and  sister,  and  lineal  descendants  of 
brother  and  sister  born  in  lawful  wedlock,  and  the  wife 
or  mdow  of  a  son,  and  the  husband  of  a  daughter. 
Only  collateral  relatives  receiving  over  $500  were 
taxed,  and  the  rate  was  five  per  cent,  on  the  property. 
In  1890  this  law  was  extended  to  include  the  direct 
heirs,  but  the  tax  was  only  to  be  upon  their  inheritance 
of  personalt\\ 

In  1910  the  Legislature  enacted  a  very  drastic 
inheritance  tax  law  for  New  York.  Class  one  con- 
sisted of  father,  mother,  widow  and  minor  child.  An 
exemption  of  $5,000  was  allowed  and  the  rates  were 
from  one  to  five  per  cent.    Class  two  consisted  of  hus- 


80  Taxation  in  New  York 

band,  adult  child,  brother,  sister,  wife  or  widow  of  a  son 
or  the  husband  of  a  daughter,  adopted  child  in  certain 
cases,  and  lineal  descendants  of  decedent.  The  rates 
were  the  same  as  in  class  one,  the  only  difference  from 
class  one  was  the  amount  of  the  exemption,  which  was 
$500,  instead  of  $5,000.  But  in  class  three,  which 
included  more  distant  relatives  and  strangers,  and 
where  the  exemption  was  $100,  the  rates  were  from  five 
to  twenty-five  per  cent. 

Such  a  drastic  law  resulted  in  much  evasion,  many 
people  preferring  to  distribute  their  propert}^  during 
their  lifetime,  rather  than  have  the  State  take  such 
a  large  portion  of  it  after  their  death.  To  promote 
uniformity  thruout  the  states  the  National  Tax  Asso- 
ciation at  its  fourth  annual  conference  held  at  Mil- 
waukee in  1910  recommended  a  model  inheritance 
tax  law.  The  New  York  Legislature  in  1911  enacted 
a  new  inheritance  tax  law  which  followed  this  model 
quite  closely.     The  rates  are  as  follows : 

Direct  Heirs 

$5,000  to     $50,000 One  per  cent. 

50,000  to      250,000 Two  per  cent. 

250,000  to  1,000,000 Three  per  cent. 

1,000,000  or  over Four  per  cent. 

Collateral  Heirs 

$1,000  to     $50,000 Five  per  cent. 

50,000  to      250,000 Six  per  cent. 

250,000  to  1,000,000. Seven  per  cent. 

1,000,000  or  over ". Eight  per  cent. 

Most  defenders  of  the  inheritance  tax  law  declare 
that  it  is  the  function  of  the  State  to  check  the  aggrega- 
tion of  wealth  into  a  few  hands,  and  to  provide  for  the 
equalization  of  fortunes.  The  opponents  of  the  inher- 
itance tax  law  insist  that  this  is  socialism,  and  that  such 
a  law  is  opposed  to  the  family  theory  of  property, 
•which  assumes  that  as  a  man  acquires  property  largely 


New  Sources  of  State  Eevexue  81 

in  order  to  leave  it  to  his  children  for  whom  it  is  his 
duty  to  provide,  this  perpetuity  of  the  means  of  family 
support  should  not  be  attacked  by  the  government. 

The  inheritance  tax  law  has  developed  out  of  the 
probate  duties  that  were  once  paid  in  Europe  as 
charges  on  transfers  and  transactions.  But  to-day 
inheritance  taxes  cannot  be  called  fees  paid  to  the 
government  to  defray  the  expenses  of  probate  courts. 
Of  course  probate  courts  are  a  source  of  expense  to 
the  government  and  a  source  of  special  benefit  to  those 
who  utilize  their  services,  but  if  the  inheritance  tax  was 
a  system  of  probate  fees,  then  the  charges  would  have 
to  be  so  light  that  practically  no  revenue  would  be 
produced. 

Andrew  Carnegie  has  advanced  the  novel  theory  that 
the  American  Republic  is  the  partner  in  every  enter- 
prise where  money  is  made  honorably  and  so  is  a 
co-heir  with  the  children  and  relatives  of  the  deceased. 
It  is  exceedingly  difficult  to  draw  a  sharp  line  where  the 
family  consciousness  ends.  The  State  is  sometimes 
represented  as  a  larger  family  and  the  bond  of  kinship 
between  distant  relatives  loses  itself  in  the  whole 
nation. 

Some  have  advanced  the  theory  that  inheritance 
taxes  are  back  taxes  paid  at  time  of  death.  Their  rea- 
soning is  that  general  property  taxes  are  to  a  large 
extent  evaded  during  life,  and  therefore  the  property 
should  be  made  to  pay  when  the  tax  cannot  be  evaded 
or  at  the  time  of  the  death  of  the  owner.  However,  the 
validity  of  this  argument  is  questionable  because  it  is 
well  nigh  impossible  to  prove  the  relation  between  the 
amount  of  the  inheritance  tax  and  the  aggregate  of 
taxes  evaded  during  life.  Again  taxes  on  real  estate 
are  generallv  paid;  it  is  the  tax  on  personal  property 
that  is  evaded.  If  this  reasoning  is  sound  then  the 
inheritance  tax  ought  to  take  the  shape  only  of  a  tax 
on  the  successions  to  personal  property. 

The  theory  that  the  inheritance  tax  is  a  capitalized 


82  Taxation  in  New  York 

income  tax  paid  once  and  for  all  at  the  close  of  life, 
instead  of  in  small  amounts  during  each  year,  is  not 
very  sound.  In  the  first  place,  the  existing  tax  system 
either  does,  or  does  not,  reach  the  income  or  property 
of  the  living  taxpayer.  If  it  does,  as  it  ought  to  do, 
then  to  capitalize  at  death  what  has  already  been  paid 
involves  double  taxation.  If  it  does  not,  the  theory  is 
still  objectionable  on  the  score  of  inequality,  because 
when  two  people  with  the  same  fortune  die  at  different 
ages  and  pay  the  same  tax,  the  amount  means  a  very 
divergent  rate.  For  if  the  tax  paid  by  the  first  person 
who  has  enjoyed  his  income  forty  years,  is  equivalent 
to  the  capitalization  of  a  five  per  cent,  tax,  then  the 
amount  payable  by  the  second  person,  who  has  enjoyed 
his  income  only  ten  years,  would  be  tantamount  to  a 
twenty  per  cent.  tax.  Anyone  can  see  the  inequality  of 
this. 

LIQUOR  TAXES 

Prior  to  1896  the  control  of  the  liquor  traffic  in  the 
State  rested  entirely  with  the  local  license  boards.  In 
that  year  a  law  was  enacted  providing  for  a  State 
license  system,  with  charges  based  upon  the  population 
of  the  various  municipalities.  One-third  of  the  proceeds 
of  the  tax  was  to  be  payable  to  the  State  and  two-thirds 
to  the  town  or  city.  In  1903  a  change  was  made,  the 
State  receiving  on-half  and  the  locality  one-half. 
Then  in  1915  the  State  took  three-fifths  and  left  two- 
fifths  to  the  locality.  But  in  1916  a  return  was  made 
to  the  enactment  of  1903  by  giving  one-half  to  the 
locality  and  reserving  one-half  to  the  State.  Finally 
in  1917  the  receipts  were  divided  one-fourth  to  the 
State  and  three-fourths  to  the  locality.  There  has  not 
been  much  scientific  study  of  the  proper  distribution  of 
these  receipts  and  the  many  changes  have  caused  con- 
fusion and  uncertainty. 

Local  option  is  allowed  in  the  various  cities  and 
to^\Tis  which  determine  whether  liquor  shall  be  sold  in 
those   communities   or  not.     The  largest  amount  of 


New  Sources  of  State  Revenue  83 

revenue  the  State  has  ever  received  in  any  one  year 
from  the  liquor  tax  law  was  in  1917  when  the  State's 
receipts  were  $12,685,228.  This  amount  will  gradu- 
ally decrease  on  account  of  the  spread  of  no  license 
territory  in  the  State.  As  prohibition  continues  to 
spread  the  time  is  not  far  distant  when  the  State  will 
receive  no  revenue  from  the  liquor  tax  law. 

The  principal  argument  advanced  for  the  liquor  tax 
law^  at  the  time  of  its  enactment  in  1896  was  that  the 
administration  of  such  a  law  would  be  far  more 
effective  if  completely  divorced  from  local  influences. 
This  has  proved  to  be  the*  case  for  the  liquor  tax  law 
is  levied  by  State  officials  wdth  a  far  greater  degree 
of  efficiency  and  therefore  with  a  far  greater  resultant 
revenue,  than  was  formerly  done  by  localities.  The 
year  previous  to  the  enactment  of  the  State  excise  law 
of  1896  the  localities  had  collected  from  liquor  licenses 
the  sum  of  $2,921,268.  The  first  year  the  new  law 
was  in  operation  there  was  collected  $10,663,882,  of 
which  the  localities  received  two-thirds  or  $7,109,254, 
so  that  the  localities  received  nearly  three  times  as 
much  when  the  liquor  traffic  was  placed  under  State 
regulation  as  when  regulated  locally. 

When  the  localities  had  charge  of  levying  liquor 
licenses  there  was  much  favoritism  displayed,  the  rates 
varied  greatly  in  different  localities,  and  also  from 
year  to  year  according  to  the  views  of  local  excise 
boards,  and  petty  persecution  was  often  visited  upon 
liquor  sellers  who  were  not  in  sympathy  with  those  in 
control  of  the  city  or  town  government.  All  this  was 
corrected  by  the  State  law  enacted  in  1896,  which  was 
enacted  primarily  for  this  purpose  and  not  as  a  revenue 
or  tax  measure. 

RACING  TAXES 

In  1887  an  annual  tax  of  five  per  cent,  upon  the  gross 
receipts  for  admission  to  race  tracks  on  which  there 
was  racing  during  the  year  was  imposed.  The  pro- 
vision of  the  penal  code  prohibiting  the   selling  of 


84  Taxation  in  New  York 

pools  was  suspended  between  May  15th  and  October 
15th  for  thirty  days  only  to  a  racing  association.  This 
act  did  not  apply  to  county  or  town  agricultural 
societies  or  fairs.  The  income  derived  from  the  racing 
taxes  was  to  be  distributed  among  the  various  county 
or  town  agricultural  society  fairs  to  improve  the  breed 
of  cattle,  sheep  and  horses.  The  most  ever  collected 
in  any  one  year  from  the  racing  taxes  was  $247,443  in 
1908.  In  1910  the  law  was  repealed.  During  the 
twenty-three  years  the  law  was  in  operation  the  State 
collected  $2,199,998  from  this  source  of  revenue. 

STOCK  TRANSFER  TAXES 

On  June  2,  1905,  an  act  went  into  effect  taxing  all 
transfers  of  stock  at  the  rate  of  two  cents  on  each 
$100  of  face  value  or  fraction  thereof.  The  tax  was  to 
be  paid  by  affixing  stamps  either  upon  the  books  of  the 
company  or  upon  the  memoranda  of  sales.  No  transfer 
of  stock  on  which  the  tax  was  not  paid  at  the  time  of 
transfer  could  be  made  the  basis  of  any  action  in  legal 
proceedings.  Brokerage  firms  are  required  to  keep  a 
book  showing  all  transactions  in  the  sale  of  stock  and 
this  book  is  subject  to  the  inspection  of  the  State 
controller.  The  State  controller  is  also  allowed  to 
examine  books  for  the  purpose  of  ascertaining  whether 
the  tax  has  been  paid  or  not.  The  largest  amount 
received  by  the  State  from  the  stock  transfer  tax  law 
in  any  one  year  was  in  1917  when  the  receipts  were 
$7,786,511. 

New  York's  special  tax  commission  of  1906  recom- 
mended the  extension  of  the  stock  transfer  taxes  to 
produce,  cotton,  wool,  coffee,  metal,  and  other 
exchanges.  When  the  law  was  first  enacted  in  1905  its 
advocates  claimed  that  it  would  check  illegitimate 
speculation  upon  the  stock  exchange.  The  claim  is 
made  that  illegitimate  speculation,  especially  in  com- 
modities, frequently  results  in  a  "  corner  "  of  some 
one  or  more  of  the  necessaries  of  life.    To  this  extent 


New  Sources  of  State  Revenue  85 

speculation  is  not  in  the  interest  of  the  ordinary  con- 
sumer, and  is  a  species  of  gambling  for  the  benefit  of 
the  members  of  the  exchanges  and  those  who  speculate 
therein. 

Both  the  stock  transfer  taxes  and  the  liquor  taxes 
are  business  taxes  and  not  property  taxes.    Business 
taxes  have  been  developed  in  Europe,  especially  the 
Gewerbesteuer    or    business    taxes    of    Prussia    first 
enacted  in  1820,  but  more  thoroly  developed  in  1891 
by  Doctor  Johannes  von  Miquel,  the  Prussian  minister 
of  finance.     All  businesses  are  placed  in  four  classes 
according  to  the  capital  employed  or  earnings  made 
and  each  class  pays  a  different  rate.     The  taxpayers 
rated  in  the  same  class  constitute  a  tax  association.  The 
government  does  not  levy  the  tax  against  each  indi- 
vidual business,  but  notifies  each  tax  association  of  the 
total  amount  of  tax  each  association  must  collect,  which 
IS  the  product  obtained  by  multiplying  the  number  of 
business  undertakings  represented  in  the  association 
by  the  average  rate  for  the  class  in  which  it  belongs. 
The  officers  of  each  tax  association  then  apportion  the 
tax  among  the  members  of  the  association.    In  1891  of 
the  total  taxes  collected  in  Prussia,  thirteen  per  cent, 
came  from  these  business  taxes.    In  Germany  the  town 
IS  to  a  certain  extent  an  association  of  business  inter- 
ests and  the  Gewerbesteur  works  satisfactorilv.     But 
business  taxes  are  not  suitable  to  an  American  com- 
monwealth unless  New  York  is  to  revert  to  the  system 
of  taxing  everything  in  sight. 

MORTGAGE  TAXES 

The  original  law  passed  in  1905  imposed  an  annual 
tax  on  every  recorded  mortgage.  The  real  estate  asso- 
ciations of  the  State  after  a  determined  fight  in  the 
Legislature  in  1906  secured  an  amendment  to  the 
original  law  making  it  a  recording  tax,  so  that  for  each 
$100  of  the  principal  of  the  mortgage  debt,  and  each 
remaining  major  fraction  thereof,  a  tax  of  fifty  cents 


86  Taxation  in  New  York 

is  imposed  at  the  time  of  the  recording  of  the  mortgage, 
and  ihe  same  is  thereafter  exempted  from  local  taxa- 
tion. The  amount  of  money  collected  is  divided 
equally  between  the  State  and  the  localities  in  which 
the  mortgaged  premises  are  located.  The  largest 
amount  the  State  has  received  from  this  source  of 
revenue  in  any  one  year  was  in  1910  when  $1,931,848 
was  collected. 

The  advocates  of  this  law  contended  that  mortgages 
were  to  a  large  extent  escaping  taxaflion  by  local 
authorities  and  therefore  the  State  had  a  right  to 
secure  revenue  in  this  way.  Even  under  the  mortgage 
tax  law  they  claimed  the  localities  in  securing  one-half 
of  the  receipts  would  receive  more  than  they  had 
obtained  previously  when  they  were  allowed  to  assess 
mortgages  as  personal  property  and  levy  a  tax  against 
it  at  the  local  tax  rate.  As  nearly  all  mortgages  are 
recorded  at  the  date  of  issue  it  is  a  sure  way  of  reaching 
these  loans. 

In  1910  Mayor  William  Jay  Gaynor  of  New  York 
City  severely  criticised  the  mortgage  tax  law  saying 
that  mortgages  were  not  property  and  therefore  should 
not  be  taxed.  His  views  are  shared  by  many  others. 
It  is  the  old  view  that  property  should  bear  the  burden 
of  taxation.  Property  owes  no  duty  to  pay  taxes. 
The  State  has  direct  relations  not,  with  property,  but 
with  persons.  Every  community  professes  to  tax. the 
individual  according  to  his  ability  to  pay,  which  may 
be  measured  by  his  property  or  by  any  other  standard. 

When  the  State  is  in  pressing  need  of  more  revenue 
an  attempt  may  be  made  to  have  the  original  law  of 
1905  re-encated,  so  that  mortgages  will  pay  an  annual 
tax.  An  exhaustive  report  published  by  the  New  York 
Tax  Reform  Association  in  1906  showed  that  while  the 
1905  mortgage  tax  law  was  in  operation  the  interest 
rates  throughout  the  State  were  increased  by  just  the 
amount  of  the  tax,  proving  conclusively  that  the  bor- 
rower was  forced  to  pay  the  tax.     Wlien  the  law  was 


New  Sources  of  State  Revenue  87 

amended  in  1906  interest  rates  went  back  to  their 
former  level.  The  man  who  borrows  money  to  build  a 
home,  or  to  carry  on  a  business,  is  handicapped  enough 
already  without  having  the  State  exact  toll  from  him 
in  the  way  of  a  mortgage  tax. 

SECURED   DEBT  TAXES 

This  law  was  passed  in  1911.  It  permitted  the  owner 
of  certain  securities  to  present  the  security  or  a 
description  of  it  to  the  State  controller  and  upon  pay- 
ment of  a  tax  of  one-half  of  one  per  cent,  of  the  face 
value  to  secure  exemption  from  the  local  assessment 
as  personal  property  at  the  local  rate. 

The  secured  debts  that  came  under  the  law  were 
mortgages  on  real  estate  located  outside  the  State, 
serial  bonds,  notes  and  debentures  secured  by  such 
mortgages,  or  by  any  mortgages  not  subject  to  the 
recording  tax  law,  bonds  of  other  states  and  munici- 
palities. The  term  includes  all  bonds  and  similar 
securities  that  are  not  exempt,  and  that  do  not  come 
ulider  the  recording  tax,  but  ordinary  notes  are  not 
included. 

All  the  revenue  of  the  secured  debt  law  goes  to  the 
State.  The  largest  amount  received  by  the  State  in 
any  one  year  from  this  law  was  $1,411,567  in  1912. 
The  law  expired  in  1915,  but  was  reimposed  in  1916 
under  the  name  of  investment  taxes  so  as  to  exempt 
securities  for  a  five-year  term.  All  securities  that  had 
paid  the  tax  under  the  law  of  1911  were  exempted  from 
the  law  of  1916.  This  law  is  not  a  taxation  statute, 
but  an  exemption  statute,  and  it  has  no  justification 
whatever.  The  bill  was  accelerated  thru  the  Legis- 
lature by  the  single  taxers.  Under  its  provisions  a 
distinguished  citizen  of  New  York  City  took  ten  million 
dollars  worth  of  bonds  to  the  State  Controller,  paid 
the  State  tax  of  one-half  of  one  per  cent.,  and  had  them 
exempted  forever  from  local  taxation.  New  York  City 
lost  thereby  a  large  amount  of  needed  revenue. 


88  Taxation  in  New  York 

MOTOR    VEHICLE   TAXES 

In  1917  the  sum  of  $2,026,189  was  collected  by  the 
State  from  a  tax  on  motor  vehicles.  As  originally 
enacted  the  State  retained  all  the  revenue  collected, 
but  as  amended  in  1917  one-half  of  the  receipts  now  go 
to  the  localities.  People  owning  automobiles  have  to 
pay  a  license  to  the  Secretary  of  State  according  to 
the  horse  power  of  their  automobile.  The  advocates 
of  this  law  contend  that  the  State  is  spending  a  great 
deal  of  money  on  the  roads  of  the  State  for  the  benefit 
of  the  automobilists  and  therefore  the  automobilists 
should  contribute  towards  their  construction  and 
maintenance.  Horse  owners  also  contend  that  the  so- 
called  good  roads  are  so  hard  and  slippery  that  they 
cannot  use  them.  In  common  justice  there  should  be 
constructed  by  the  side  of  the  State  roads  dirt  roads 
for  the  use  of  horse-drawn  vehicles. 


CHAPTER  VII 
STATE   EXPENDITURES 

The  expenses  of  the  State  now  amount  to  over  sixty 
million  dollars  a  year.  They  are  bound  to  increase. 
In  a  few  years  they  will  be  eighty  million  dollars  a 
year,  and  then  one  hundred  million  dollars  a  year. 
Where  will  all  this  money  come  from?  Undoubtedly 
from  increased  taxation,  both  direct  and  indirect. 

One  of  the  most  important  causes  of  the  growing 
expenditures  of  the  State  has  been  the  increasing 
number  of  new  offices  and  commissions  created  in  the 
last  few  years.  In  nearly  every  case  these  commis- 
sions have  been  created  to  exercise  supervision  and 
control  over  private  industry  or  business  in  the  interest 
of  society  as  a  whole.  Here  it  is  we  see  the  changed 
attitude  of  the  State  toward  the  life  of  its  citizens.  Not 
only  every  class  of  society  is  being  brought  under  the 
care  and  supervision  of  the  State,  but  every  activity 
of  every  citizen  is  being  regulated  in  the  interests 
of  all. 

There  has  not  been  much  planning  in  the  creation 
of  these  commissions.  They  have  grown  up  without 
system.  Some  of  them  overlap  each  other  in  their 
work,  and  there  ought  to  be  an  entire  reconstruction, 
consolidating  many  of  them  together.  The  work  the 
State  is  doing  can  be  done  more  efficiently  with  fewer 
commissions  and  also  more  economically. 

The  State  controller  classifies  the  expenditures 
mider  the  following  divisions :  Executive,  administra- 
tive, legislative,  judicial,  regulative,  educational,  agri- 
cultural, defensive,  penal,  curative,  charitable,  protec- 
tive, constructive,  and  general. 

The  executive  division  includes  the  salary  of  the 
governor,  office  employees  and  office  expenses.  The 
appropriation  for  the  executive  division  in  1917  was 

[S9] 


90  Taxation  in  New  York 

$137,201.  Under  the  first  State  constitution  of  1777 
the  governor  was  to  be  a  wise  and  discreet  freeholder. 
Remembering  their  struggles  with  the  royal  governors, 
the  people  were  distrustful  of  the  executive  depart- 
ment and  under  the  first  constitution  of  1777  the  gov- 
ernor did  not  have  the  power  of  veto  or  the  power  of 
appointment.  The  council  of  revision,  consisting  of 
the  governor,  chancellor,  and  the  judges  of  the 
supreme  court,  or  any  two  of  them,  were  to  revise  all 
bills  passed  by  the  Legislature.  It  was  not  until  the 
constitution  of  1821  was  adopted  that  the  governor  was 
given  the  power  to  veto  bills.  During  the  forty-five 
years  that  the  first  constitution  was  in  force  only  three 
laws  approved  by  the  council  of  revision  were  after- 
wards declared  unconstitutional.  In  a  republic  it  is 
the  duty  of  the  executive  to  enforce  the  laws  and  con- 
sequently the  executive  ought  not  to  be  part  of  the 
legislative  branch  of  the  government  and  help  make 
the  laws  which  he  does  by  having  the  power  to  veto 
bills. 

The  council  of  appointment  consisted  of  the  gover- 
nor, and  four  senators,  one  from  each  of  the  senatorial 
districts,  to  be  openly  nominated  and  appointed  by  the 
assembly  each  year.  Senators  were  not  eligible  to  the 
council  of  appointment  for  two  years  successively.  A 
majority  of  the  council  of  appointment  constituted  a 
quorum.  The  governor  had  no  vote,  but  in  the  event  of 
a  tie  had  a  casting  vote.  For  the  election  of  senators 
the  State  at  that  time  was  divided  into  four  great  dis- 
tricts, the  southern,  the  middle,  the  western,  and  the 
eastern.  There  were  very  few  elective  officers  in  the 
early  days,  and  mayors,  sheriffs  and  nearly  all  local 
officers  were  appointed  by  this  council  of  appointment. 
At  the  time  of  the  constitutional  convention  of  1821  the 
patronage  of  the  council  of  appointment  was  enormous 
at  that  time  8,287  military  and  6,663  civil  officers  held 
commissions  from  the  council  of  appointment.     The 


State  Expexditures  91 

constitution  of  1821  abolished  both  the  council  of 
revision  and  the  council  of  appointment. 

The  administration  division  includes  the  salaries  of 
the  secretary  of  state,  controller,  treasurer,  attorney 
general,  civil  service  commission,  office  employees  and 
office  expenses.  The  appropriation  for  the  adminis- 
tration division  in  1917  was  $1,869,818. 

The  secretary  of  state  is  an  inheritance  from  the 
colonial  period.  It  is  not  mentioned  in  the  constitution 
of  1777.  The  secretary  of  state  is  the  custodian  of  the 
State  archives,  and  also  has  functions  in  relation  to 
elections  and  corporations.  From  1821  to  1854  the 
secretary  of  state  had  super\'ision  over  the  common 
schools  of  the  State. 

The  office  of  auditor  general  existed  in  the  colony 
for  nearly  a  century  before  the  Revolutionary  War.  It 
was  abolished  in  1797  and  the  office  of  cont^roller 
created  as  a  substitute  for  it.  The  controller  is  the 
financial  officer  of  the  State.  When  we  recall  the  great 
work  done  by  Azariah  Cutting  Flagg,  who  was  con- 
troller from  1842  to  1847,  in  preventing  the  State  from 
going  into  bankruptcy  during  that  period,  we  must 
conclude  that  the  controller  is  one  of  the  important 
offices  of  the  State. 

The  office  of  treasurer  was  provided  for  by  the  con- 
stitution of  1777.  At  first  appointed  each  year  by  the 
Legislature,  it  was  not  until  1846  that  the  treasurer 
was  elected  by  the  people.  This  useless  office  should 
be  abolished.  What  little  work  is  done  by  the  treasurer 
can  be  better  performed  by  the  State  controller. 

The  office  of  attorney  general  existed  in  the  New 
York  colony.  Before  the  office  of  district  attorney  was 
created  in  1801,  the  attorney  general  went  from  county 
to  county  and  prosecuted  criminal  cases.  It  was  a  far 
more  important  office  in  that  early  period  than  it  is  at 
present. 

The  civil  service  commission  was  created  in  1883. 
This  commission  conducts  civil  service  examinations. 


92  Taxation  in  New  Yoek 

The  legislative  division  includes  the  salaries  of  sen- 
ators, assemblymen,  lieutenant  governor,  employees 
and  expenses.  The  appropriation  for  the  legislative 
division  in  1917  was  $2,729,134.  As  all  if  the  State's 
great  enterprises  and  constructive  work  originates 
with  the  Legislature,  this  is  the  most  important  branch 
of  the  State  government. 

The  judicial  division  includes  the  salaries  of  the 
judges  of  the  court  of  appeals,  judges  of  the  supreme 
court,  court  of  claims,  State  reporter,  and  employees 
and  office  expenses.  The  appropriation  for  the  judi- 
cial division  in  1917  was  $3,369,949..  The  supreme 
court  was  constituted  by  the  colonial  assembly  in  1691. 
The  court  of  appeals  was  constituted  by  the  constitu- 
tion of  1846.  Before  that  date  there  had  been  a  court 
of  errors  consisting  of  the  chancellor,  judges  of  the 
supreme  court,  and  all  members  of  the  State  senate. 
It  w^as  felt  that  this  court  had  outlived  its  usefulness, 
for  it  was  not  apt  to  declare  any  laws  unconstitutional 
when  the  majority  of  the  court  was  made  up  of  sena- 
tors who  had  passed  the  laws.  Under  the  constitution 
of  1821  all  judicial  officers  in  the  State  with  the  single 
exception  of  justices  of  the  peace  were  appointed  by 
the  governor.  This  was  czarism  with  a  vengeance. 
The  constitution  of  1846  deprived  the  governor  of 
these  despotic  powers  and  made  all  judicial  ofl&cers 
elective. 

The  board  of  claims  was  created  by  statute  in  1883, 
and  changed  to  a  court  of  claims  in  1897. 

The  regulative  division  includes  the  excise  depart- 
ment, health  department,  industrial  commission,  pub- 
lic service  commission,  and  tax  department.  The 
appropriation  for  the  regulative  division  in  1917  was 
$4,831,753. 

The  excise  department  was  created  in  1896  to  admin- 
ister the  liquor  tax  law.    When  New  York  becomes  a 


State  Expenditures  93 

prohibition  state,  the  work  of  this  department  will 
cease. 

The  department  of  health  is  a  continuation  of  the 
State's  activities  along  the  line  of  public  health.  In 
1794  the  governor  was  allowed  to  spend  sums  not 
exceeding  $2,500  for  the  purpose  of  preventing  the 
spread  of  contagious  diseases.  A  few  years  later 
quarantine  regulations  were  put  into  operation  on  all 
vessels  entering  the  port  of  New  York,  three  health 
commissioners  were  appointed,  a  lazarette  was  built, 
and  a  detention  station  was  erected  on  Bedloe's  Island 
at  State  expense.  A  tariff  schedule  was  imposed  upon 
all  captains,  mates,  passengers  and  sailors  entering 
the  city  of  New  York,  and  the  sums  collected  went  to 
the  support  of  sick  seamen  and  foreigners  in  the  quar- 
antine station,  while  the  balance  went  to  the  Hospital 
of  New  York.  If  there  were  any  deficiencies  it  was 
made  up  by  the  State. 

For  a  time  the  three  State  health  commissioners  had 
charge  of  the  cleaning  of  the  streets  of  the  City  of 
New  York,  but  the  expense  was  borne  by  the  city.  In 
1799  New  York  City  was  given  the  power  of  draining 
lots,  filling  up  marshes,  and  installing  a  sewerage  sysi- 
tem.  Thus  occurred  the  transfer  of  the  responsi- 
bility for  the  health  of  the  city  from  the  State  to  the 
municipality. 

The  State  board  of  health  was  created  in  1880  and 
it  collects  and  preserves  statistics  relating  to  mortal- 
ity, disease  and  health  thruout  the  State.  It  has  super- 
vision over  the  work  of  local  health  authorities  and  is 
charged  with  the  enforcement  of  the  public  health  law 
and  the  sanitary  code. 

The  industrial  commission  came  into  being  in  1915 
as  a  consolidation  of  the  labor  department  and  the 
workmen's  compensation  commission.  The  labor  de- 
partment was  created  in  1901  by  consolidating  the 
bureau  of  labor  statistics,  started  in  1883,  with  the 


94  Taxation  in  New  York 

board  of  mediation  and  arbitration,  and  factory  inspec- 
tors, started  in  1886.  In  the  eighties  industrial  strikes 
first  began  to  be  a  disturbing  element  to  society,  and 
largely  to  prevent  if  possible  these  misunderstandings 
between  em})loyers  and  employees  these  bureaus  were 
created.  The  workmen's  compensation  commission 
came  into  being  in  1914  with  the  enactment  of  the  work- 
men's compensation  law,  a  measure  along  the  line  of 
social  justice. 

There  arc  two  public  service  commissions,  one  called 
the  first  district  public  service  commission,  which  has 
supervision  over  all  the  public  service  companies  of 
New  York  City  excepting  steam  railroads,  telephone 
and  telegraph  companies ;  and  the  second  district  pub- 
lic service  commission,  which  has  supervision  over  all 
the  public  service  companies  outside  of  New  York 
City  in  the  State  and  also  of  the  steam  railroads  and 
telephone  and  telegraph  companies  for  the  whole  State. 

The  two  ])ublic  service  commissions  were  formed  by 
the  consolidation  in  1907  of  the  railroad  commission 
and  the  gas  commission.  The  railroad  commission  was 
organized  in  1883  and  the  gas  commission  in  1905. 

The  tax  department  is  a  continuation  of  the  State 
board  of  assessors  constituted  in  1859  to  equalize  real 
estate  assessments  as  between  counties  for  the  levying 
of  State  taxes.  It  now  has  the  assessment  of  the  cor- 
poration taxes  and  the  special  franchise  taxes.  It  also 
apportions  mortgage  taxes  when  the  same  are  in  more 
than  one  tax  district.  It  would  seem  that  all  the  State 
taxes  should  be  in  charge  of  this  department.  This 
would  mean  that  the  motor  vehicle  taxes  now  in  charge 
of  the  secretary  of  state  ;  the  liquor  taxes  now  in  charge 
of  the  excise  department;  and  the  inheritance  taxes, 
stock  transfer  taxes,  and  investment  taxes  now  in 
charge  of  the  controller  would  be  transferred  to  the 
tax  department. 

The  ('(lueational  division  is  under  the  control  of  the 


State  Expenditures  95 

University  of  the  State  of  New  York,  governed  by  a 
board  of  regents,  now  twelve  in  number.  They  choose 
a  commissioner  of  education  who  has  supervision  over 
all  the  public  schools  of  the  State.  The  appropriation 
for  the  educational  division  in  1917  was  $10,021,631. 
The  University  of  the  State  of  New  \York  was  created 
by  the  Legislature  in  1784  to  revive  Kings  College,  now 
Columbia  University,  which  had  been  discontinued 
during  the  Revolutionaiy  War.  The  regents  of  this 
university  were  charged  with  the  duty  of  incorporating 
academies  and  colleges.  The  State's  permanent  pub- 
lic school  system  was  organized  in  1812,  and  down  to 
that  date  the  board  of  regents  of  the  University  of  the 
State  of  New  York  had  chartered  three  colleges,  Col- 
umbia, Union  and  Hamilton,  and  had  also  chartered 
thirty  academies. 

Under  the  agricultural  division  is  the  council  of 
farms  and  markets  created  in  1917  by  a  consolidation 
of  the  department  of  agriculture  and  the  department 
of  foods  and  markets.  The  appropriation  for  the  agri- 
cultural division  in  1917  was  $3,003,219.  As  early 
as  1806  the  State  contributed  money  to  agricultural 
exhibitions  where  prizes  were  awarded.  In  1841  the 
first  State  fair  was  held  at  Syracuse.  In  1881  the  State 
made  its  first  appropriation  for  an  agricultural  experi- 
mental station.  In  1884  the  department  of  agriculture 
was  created  and  also  the  dairy  commission,  altho  the 
two  were  afterwards  consolidated  together.  In  1914 
the  department  of  foods  and  markets  was  organized 
to  aid  in  the  creation  of  local  markets,  investigate  the 
cost  of  food  production,  and  strive  to  bring  about  a 
closer  co-operation  between  producers  and  consumers. 

The  defensive  division  has  charge  of  the  military 
affairs  of  the  State  and  is  in  charge  of  the  adjutant 
general.  The  first  adjutant  general  was  appointed  in 
1784.  The  expenditures  for  this  division  must  neces- 
sarily be  of  a  fluctuating  character  as  the  expenses  in 


96  Taxation  in  New  Yoek 

time  of  war  are  much  greater  than  in  time  of  peace. 
The  appropriation  for  the  defensive  division  in  1917 
was  $8,162,513. 

The  penal  division  is  in  charge  of  the  penal  institu- 
tions of  the  State.  The  Legislature  in  1796  provided 
for  the  erection  of  two  State  prisons,  one  at  Albany 
and  the  other  in  New  York  City.  The  one  at  Albany 
was  never  built,  but  Newgate  Prison  was  constructed 
in  New  York  City  and  opened  for  inmates  in  1797.  It 
was  soon  found  to  be  inadequate  and  it  was  determined 
to  sell  it  and  build  a  new  one.  Sing  Sing  was  selected 
as  the  new  site  chiefly  because  of  an  extensive  quarry 
of  marble  on  the  premises,  which  would  afford  employ- 
ment to  the  convicts.  It  was  opened  in  1825,  but 
another  prison  had  been  constructed  and  opened  at 
Auburn  in  1820.  The  prison  at  Dannemora  was  erected 
in  consequence  of  the  assertion  of  artisans  that  the 
pursuit  of  mechanical  employments  by  convicts  was 
prejudicial  to  their  interest,  and  so  the  prison  in  Clin- 
ton County  was  erected  for  the  purpose  of  mining  and 
working  iron.  It  was  opened  in  1845.  The  Matteawan 
State  hospital  for  insane  criminals  was  opened  in  1892. 
To  carry  out  more  humane  methods  of  having  prison- 
ers work  out  in  the  open  upon  a  large  farm  is  the  pur- 
pose of  the  Great  Meadow  prison  at  Comstock  in 
Washington  County,  which  was  opened  in  1911. 

Under  the  constitution  of  1846  there  w^ere  three 
inspectors  of  State  prisons.  The  constitution  was 
amended  in  1876  and  a  superintendent  of  State  prisons 
substituted  in  place  of  these  inspectors.  The  appro- 
priation for  the  penal  division  in  1917  was  $2,397,960. 

On  June  30,  1916,  there  were  5,486  prisoners  in  the 
four  State  prisons,  Auburn,  Dannemora,  Great  Mea- 
dow and  Sing  Sing.  There  were  1,676  inmates  in 
reformatories,  Elmira,  Napanoch  and  reformatories 
in  New  York  City.  Also  there  were  612  inmates  in 
refuges  for  women  at  Albion  and  Bedford  Hills. 

The  curative  division  is  in  charge  of  the  State  hos- 


State  Expenditures  97 

pitals  for  the  insane.  The  State  Care  Act  was  passed 
by  the  Legislature  in  1893  by  which  all  the  insane 
patients  ceased  to  be  a  charge  upon  the  several  coun- 
ties and  became  a  charge  upon  the  State.  The  insane 
patients  were  transferred  to  the  State  hospitals  as 
rapidly  as  buildings  could  be  provided  for  them.  The 
care  of  the  defective  classes  began  to  claim  attention 
about  1840.  Up  to  this  time  their  care  had  been  left  to 
local  authorities,  to  private  individuals  or  to  private 
institutions.  In  1854  Governor  Horatio  Seymour  in 
his  annual  message  to  the  Legislature  said:  ''  While 
any  of  our  unfortunate  insane  remain  unprovided  for, 
it  is  obvious  that  the  State  has  not  performed  her 
whole  duty  toward  her  suffering  children. ' ' 

At  present  the  State  has  thirteen  State  hospitals 
for  the  insane,  which  in  1915  contained  34,249  inmates. 
There  were  also  964  insane  persons  in  private  institu- 
tions. Down  to  1915  the  State  had  expended  over 
thirty-one  million  dollars  for  building  equipment  and 
furnishing  for  these  thirteen  institutions.  The  appro- 
priation for  the  curative  division  in  1917  was 
$10,457,685.  This  division  is  in  charge  of  the  State  hos- 
pital commission,  formerly  known  as  the  State  lunacy 
commission,  which  in  1889  superseded  the  State  com- 
sioner  in  lunacy,  which  office  was  created  in  1873. 

The  charitable  division  is  in  charge  of  the  State 
charitable  institutions.  There  are  at  present  nineteen 
State  charitable  institutions.  The  State  board  of 
charities  was  created  in  1867.  In  1915  there  were  91,019 
persons  in  institutions  receiving  public  money  and 
under  the  supervision  of  the  State  board  of  charities. 
Of  this  number  7,118  were  in  county  almshouses,  7,208 
in  city  and  town  almshouse  institutions,  37,094  in 
homes  for  children,  and  9,529  in  hospitals. 

Very  early  in  the  history  of  the  New  York  colony 
the  poor  came  in  for  attention.    The  Colonial  Assem- 
bly on  November  1,  1683,  passed  an  act  relative  to  the 
poor  as  follows : 
4 


98  Taxation  in  New  Yokk 

"  Whereas  it  is  the  Custome  and  practice  of  his 
Maties  Realm  of  England,  and  all  the  adjacent  Col- 
lonyes  in  America,  That  Every  respective  Citty, 
Towne,  parish  and  precint  doth  care  and  provide  for 
the  poor  who  doe  inhabit  in  their  respective  precints 
aforesaid,  Therefore  it  is  Enacted  by  the  authority 
aforesaid.  That  for  the  Time  to  come  the  respective 
Comiconers  of  Every  County,  Citty,  towne.  Parish, 
Precint  aforesaid,  shall  make  provision  for  the  main- 
tenance and  Support  of  their  poor  respectively." 

In  1758  New  York  City  purchased  Bedloe's  Island 
for  a  pest  house.  In  1798  one-third  of  the  duties  col- 
lected upon  goods  sold  at  auction  was  set  apart  for 
the  relief  of  the  foreign  poor  in  New  York  City. 

The  appropriation  for  the  charitable  division  in  1917 
was  $4,466,012. 

The  protective  division  relates  to  public  buildings, 
ptiblic  lands,  Indian  affairs,  maintenance  of  monu- 
ments, parks,  reservations,  historic  buildings,  water 
supply,  and  forestry.  The  appropriation  for  this 
division  in  1917  was  $3,117,990. 

The  conservation  commission  was  created  in  1911  by 
the  consolidation  of  the  forest,  fish  and  game  commis- 
sion and  the  State  water  supply  commission.  A  fish 
commission  was  organized  in  this  State  in  1868  to 
propagate  fish  by  establishing  fish  hatcheries.  A  forest 
commission  was  organized  in  1885  to  care  for  the  newly 
acquired  State  lands  in  the  Adirondacks  and  Catskills, 
In  1895  these  two  commissions  were  consolidated  into 
the  fisheries,  game  and  forest  commission,  and  in  1903 
it  was  reorganized  under  the  name  of  forest,  fish  and 
game  commission.  In  1905  the  State  water  supply 
commission  was  created.  This  latter  commission  was 
organized  to  exercise  supervision  over  the  course 
adopted  by  the  municipalities  and  local  divisions  in 
acquiring  control  over  the  water  supply  of  the  State. 
Every  municipality  was  required  to  submit  plans  to  the 
commission  and  have  them  approved  by  it  before  they 


State  Expenditures  99 

were   allowed  to  take   over  a  new  source   of  water 
supply. 

The  conservation  commission  has  charge  of  the 
State's  forest  preserve,  which  consisted  in  1915  of 
1,493,660  acres  in  the  Adirondacks  and  114,282  acres 
in  the  Catskills.  The  State  is  gradually  acquiring  more 
land  in  these  two  sections  and  the  Adirondack  Park 
will  some  day  consist  of  3,313,564  acres  and  the  Cats- 
kill  Park  of  576,120  acres.  This  land  is  to  be  forever 
reserved  for  the  free  use  of  all  people  for  their  health 
and  pleasure,  and  as  forest  land  necessary  to  the  pres- 
ervation not  only  of  the  head  waters  of  the  chief 
rivers  of  the  State,  but  also  of  the  future  timber 
supply. 

The  constructive  division  includes  the  expenses  of 
the  offices  of  the  State  engineer  and  surveyor,  superin- 
tendent of  public  works,  State  architect,  and  highway 
department.  The  appropriation  for  this  division  in 
1917  was  $7,733,719. 

The  department  of  public  works  has  charge  of  the 
State  canal  system.  Canal  commissioners  were  created . 
by  the  first  act  of  the  Legislature  in  1816  authorizing 
the  construction  of  the  Erie  Canal.  By  an  amendment 
to  the  constitution  in  1876  canal  commissioners  were 
abolished  and  a  State  superintendent  of  public  works 
substituted  in  their  place. 

The  office  of  surveyor  general  existed  under  the  gov- 
ernment of  the  colony  of  New  Netherland  and  was 
continued  during  the  English  occupation.  There  was 
also  a  surveyor  of  the  king's  woods  from  1698  to  1777. 
Most  of  the  lands  of  the  State  were  parceled  out  for 
sale  and  settlement  by  rude  chain  and  compass  surveys, 
made  under  the  authority  of  the  owners  of  the  various 
grants.  The  object  was  simply  to  measure  and  mark 
in  the  cheapest  manner  the  boundaries  of  lots  offered 
to  the  incoming  settlers.  The  first  map  of  the  State 
was  made  by  putting  together  the  results  of  these 
special  surveys.    Its  errors  and  deficiencies  were  such 


100  Taxation  in  New  Yokk 

that  Governor  DeWitt  Clinton,  in  his  message  to  the 
Legislature  in  1827,  urged  the  necessity  of  '  *  an  authen- 
tic and  official  map  of  the  State."  Nothing  was  done 
until  1876,  when  following  a  report  of  a  committee  of 
the  American  Geographical  Society  to  the  effect  that 
there  had  never  been  an  official  survey  of  the  State 
and  that  the  maps  published  by  private  parties  were 
grossly  erroneous,  the  Legislature  appointed  a  com- 
mission to  make  an  accurate  trigonometrical  and  topo- 
graphical survey  of  the  State.  This  commission  made 
its  final  report  in  1887,  but  the  work  was  not  then  fin- 
ished. The  United  States  geological  survey  began  a 
topographical  map  of  New  York  in  1892  and  in  1916 
the  work  was  four-fifths  completed.  When  this  survey 
is  finished  there  will  then  be  an  accurate  map  of  the 
State. 

The  constitution  of  1846  changed  the  title  of  sur- 
veyor general  to  engineer  and  surveyor  and  made  the 
office  eligible  only  to  a  practical  engineer.  This  was 
largely  owing  to  the  difficulties  the  State  was  then 
experiencing  in  the  construction  and  management  of 
its  canal  system.  Previous  to  1883  w^hen  the  railroad 
commission  was  created,  the  railroads  were  required 
to  report  the  condition  of  their  affairs  to  the  engineer 
and  surveyor.  This  office  is  not  as  important  as  for- 
merly as  it  no  longer  has  supervision  over  the  rail- 
roads of  the  State,  neither  does  it  have  any  surveying 
to  do. 

The  highway  department  w^as  created  in  1909.  In 
the  early  days  the  State  furthered  the  improvement  of 
roads  by  granting  charters  to  turnpike  companies  and 
to  bridge  companies.  These  were  allowed  to  charge 
tolls  to  keep  the  roads  and  bridges  in  repair.  As  the 
charters  of  these  companies  expired,  the  roads  and 
bridges  became  the  property  of  the  State  generally  by 
purchase.  There  are  still  four  toll  bridges  in  the 
State.    The  last  toll  gate  disappeared  in  1915. 

The  care  and  maintenance  of  public  highways  were 


State  EkxFENMOTUKES  "    '   '  '  101 

left  entirely  to  the  local  subdivisions.  As  a  result  the 
roads  in  the  country  were  generally  in  a  very  poor 
condition.  The  extended  use  of  the  automobile  caused 
a  demand  for  better  roads  and  also  that  the  State 
should  assist  the  localities  in  the  construction  and 
maintenance  of  public  highways.  The  year  1898  marked 
a  new  era.  That  year  an  act  was  passed  providing  for 
the  construction  of  macadam  roads  by  the  State  author- 
ities and  the  cost  was  to  be  apportioned  among  the 
State,  counties  and  towns;  the  State  to  pay  fifty  per 
cent.,  the  counties  thirty-five  per  cent.,  and  the  towns 
fifteen  per  cent. 

Then  came  the  money  system  which  was  designed  to 
encourage  the  abandonment  of  the  antiquated  way  of 
working  out  the  highway  tax.  Under  this  act  the  State 
paid  to  each  town  which  abandoned  the  labor  system, 
and  paid  its  highway  tax  in  cash,  a  sum  equal  to 
twenty-five  per  cent.,  of  the  tax  levied.  Finally  the 
labor  system  was  abolished  entirely  in  1908  and  all 
towns  were  compelled  to  come  under  the  money  system. 

For  a  few  years  the  engineer  and  surveyor  was 
given  supervisory  power  over  the  expenditures  of 
money,  and  the  town  officials  were  required  to  render 
accounts  to  him  for  all  highway  funds  raised  in  the 
town,  or  donated  to  it  by  the  State.  His  work  of  this 
character  ceased  in  1909  when  the  highway  depart- 
ment was  created. 

In  1905  the  people  voted  a  bond  issue  of  fifty  million 
dollars,  the  proceeds  of  which  were  to  be  used  in  pay- 
ing the  State's  share  of  the  expense  of  improving  roads. 
These  bonds  were  payable  in  fifty  years.  In  1912  the 
people  voted  another  bond  issue  of  fifty  million  dollars. 

The  present  system  of  public  highways  consists  as 
follows:  (1)  the' State  highways,  consisting  of  thru 
routes  running  across  the  State,  aggregating  3,514 
miles,  which  are  to  be  improved  solely  at  the  expense 
of  the  State;  (2)  the  county  highways,  consisting  of 
main  roads,  aggregating  8,380  miles,  which  are  to  be 


102  I'AXATiOZS'  IN  Mew  Yokk 

improved  at  the  joint  expense  of  the  State,  county  and 
town  in  the  proportion  of  fifty  per  cent,  of  the  expense 
to  be  borne  by  the  State,  thirty-five  per  cent,  of  the 
expense  to  be  borne  by  the  county,  and  fifteen  per  cent, 
of  the  expense  to  be  borne  by  the  town;  (3)  the  town 
roads,  embracing  all  the  remaining  roads,  aggregating 
about  77,000  miles,  these  are  maintained  and  repaired 
as  earth  roads  at  the  expense  of  the  towns  plus  the  aid 
received  from  the  State. 

Our  severe  northern  winters  raise  havoc  with  the 
concrete  roads  which  are  being  built.  Some  of  the 
roads  are  worn  out  before  they  are  paid  for.  The  con- 
crete roads  are  so  hard  that  horses  slip  and  fall  upon 
them.  As  these  concrete  roads  are  for  the  benefit  of 
automobilists  there  ought  to  be  a  dirt  road  at  the  side 
for  the  horses  to  travel  on. 

The  work  of  the  department  of  public  works,  engi- 
neer and  surveyor,  and  highway  department  are  sim- 
ilar and  to  a  certain  extent  overlap  each  other  and  it 
would  seem  that  these  three  departments  should  be  con- 
solidated into  one  and  accomplish  this  work  with 
greater  efficiency. 

The  general  division  includes  the  banking  depart- 
ment and  the  insurance  department.  The  appropria- 
tion for  this  division  n  1917  was  $1,186,432. 

In  1829  three  bank  commissioners  were  to  be  ap- 
pointed, whose  duties  were  to  visit  the  banks  of  the 
State,  examine  their  condition,  and  report  annually  to 
the  Legislature  the  result  of  their  investigations.  One 
of  these  bank  commissioners  was  to  be  appointed  by  the 
governor  and  senate,  while  the  other  two  commissioners 
were  to  be  appointed  by  the  banks  themselves.  These 
bank  commissioners  were  abolished  in  1843  and  the 
banks  directed  to  report  to  the  State  controller.  In 
1851  the  office  of  superintendent  of  banks  was  created, 
who  has  supervision  over  the  banks  of  the  State. 

The  office  of  superintendent  of  insurance  was  created 
in  1860.     Before  that  time  supervisory  powers  over 


State  Expenditures  103 

insurance  companies  was  exercised  by  the  State  con- 
troller. 

While  the  expenses  of  these  two  departments  are 
made  directly  out  of  the  State  treasury,  the  treasury 
is  subsequently  reimbursed  by  means  of  assessment 
levied  on  the  various  banks  and  insurance  companies 
under  the  control  of  the  two  departments.  The  same 
system  was  in  vogue  with  the  railroads  when  they  were 
under  the  supervision  of  the  railroad  commission,  but 
when  the  public  service  law  was  enacted  in  1907  it 
prohibited  any  further  assessment  against  railroads 
for  the  support  of  a  State  commission.  The  same  rule 
should  apply  to  banking  and  insurance  companies. 

In  Illinois  the  department  of  trade  and  commerce 
has  supervision  over  insurance  companies,  public  serv- 
ice companies,  grain  inspection,  and  weights  and 
measures.  In  this  State  the  two  public  service  com- 
missions, the  insurance  department,  and  the  banking 
department  could  be  consolidated  into  one  depart- 
ment with  a  single  person  at  the  head  of  it  to  be  elected 
by  the  people. 

The  debt  of  the  State  in  1917  was  $236,309,660, 
divided  as  follows:  canal  debt,  $148,000,660;  highway 
debt,  $80,000,000;  Palisades  interstate  park  debt, 
$5,000,000;  forest  preserve  fund,  $2,500,000;  and  Sara- 
toga Springs  reservation,  $809,000.  In  1917  the 
State's  sinking  funds  amounted  to  $48,689,828. 

Bather  than  issue  long  term  bonds  which  require 
the  establisHiment.  of  a  sinking)  fund  to  retire  the 
bonds  when  due,  it  would  be  bettor  to  issue  serial 
bonds  part  of  which  would  bo  retired  each  year.  Then 
a  sinking  fund  would  not  be  required.  AMiile  serial 
bonds  might  not  obtain  as  ready  a  sale  as  long  term 
bonds  yet  it  would  result  in  a  great  saving  and  con- 
venience to  the  State.  The  State  constitution  should 
be  amended  to  allow  the  issuance  of  serial  bonds. 

By  a  vote  of  the  people  November  4,  1884,  the  ton 
per  cent,  debt  limit  was  adopted  as  a  constitutional 


104  Taxation  in  New  York 

amendment.  This  prevents  counties  or  cities  from 
incurring  an  indebtedness  in  excess  of  ten  per  cent, 
of  their  assessed  valuation  of  real  estate.  It  is  in- 
tended to  prevent  extravagant  expenditures  which 
would  lead  to  bankruptcy.  The  constitution  has  since 
been  amended  to  exempt  indebtedness  incurred  by 
cities  for  a  water  supply  and  in  the  case  of  New  York 
City  indebtedness  incurred  for  any  rapid  transit  or 
dock  investment  is  exempted.  There  is  no  constitu- 
tional restriction  on  the  State's  indebtedness. 


CHAPTER  VIII 
NEW  ACTIVITIES  OF  THE  STATE 

In  1911  Governor  John  Alden  Dix  in  his  annual 
message  to  the  Legislature  stated  the  following: 

**  The  total  power  used  in  manufacturing  in  New 
York  State  in  1905  Avas  1,643,000  horsepower,  of 
which  850,000  horsepower  was  produced  by  steam. 
To  produce  this  850,000  horsepower  with  coal  thru- 
out  the  year  costs  $85,000,000.  To  produce  850,000 
horsepower  by  water  and  distribute  it  electrically 
would  cost  twenty-five  million  dollars  per  annum,  thus 
saving  sixty  million  dollars  per  annum.  These  figures 
interpreted  mean  that  we  are  contributing  sixty  million 
dollars  per  year  to  other  states  for  the  purchase 
of  coal.  This  amount  could  be  saved  annually 
to  the  State  by  taking  advantage  o^  our  own 
resources.  Rivers,  like  other  resources  of  nature, 
must  be  adapted  to  man's  uses  in  order  to  reach 
anything  like  a  reasonable  degree  of  efficiency. 
Every  river  in  the  State  exhibits  such  irregularity 
of  flow  in  its  natural  state  that  the  water  power  which 
may  be  developed  economically  from  the  present 
minimum  flow  is  far  below  the  average  which  can  be 
obtained  by  means  of  scientific  regulation.  We  should 
take  advantage  of  these  industrial  benefits  so  as  to 
increase  the  plants  along  our  systems  of  waterways. 
In  this  way  there  would  be  increased  prevention  of 
damage  by  floods,  and  there  would  be  increased  gen- 
eral wealth  and  health  of  the  people.  The  accomplish- 
ment of  this  great  project  should  not  be  delayed  if  we 
are  to  maintain  this  Commonwealth  as  the  Empire 
State." 

If  some  action  had  been  taken  at  that  time  the 
fuelless  Mondays  during  the  winter  of  1918  would 
not  have  compelled  all  manufacturing  plants  in  New 

[1051 


106  Taxation  in  New  York 

York  State  to  close.  The  State  conservation  commis- 
sion states  that  New  York  has  more  water  power 
than  any  other  state  in  the  Union.  They  state  that 
with  a  regulated  flow  of  the  rivers  there  is  available 
2,659,410  horsepower  within  the  State  of  which  only 
697,119  horsepower  has  so  far  been  developed.  This 
is  allowing  for  540,000  horsepower  from  Niagara 
Falls  where  under  the  existing  treaty  twenty  thousand 
cubic  feet  per  second  is  at  present  allowed.  By  the 
abrogation  of  this  treaty  4,580,000  horsepower  could 
be  obtained  from  these  falls  according  to  the  State 
conservation  commission. 

The  difference  between  maximum  and  minimum 
flow  of  most  of  our  streams  when  stated  in  figures  is 
startling  to  the  layman.  The  Hudson,  which  is  more 
or  less  typical  of  the  streams  of  the  State,  has  a 
maximum  recorded  daily  discharge  of  one  hundred 
times  its  least  daily  flow.  The  Genesee,  which  is  much 
more  flashy,  has  a  maximum  daily  discharge  about 
four  hundred  times  the  minimum  daily  flow.  The 
yearly  discharge  of  some  of  the  rivers  in  a  wet  year 
is  nearly  double  the  yearly  flow  of  a  dry  year.  On  a 
great  many  streams  as  much  as  three-fourths  of  the 
volume  of  yearly  flow  usually  runs  off  in  the  spring 
and  early  summer  months. 

Over  a  large  portion  of  the  State  the  greater  part 
of  the  annual  precipitation  occurs  in  the  winter  and 
spring  months.  Considerable  water  is  temporarily 
stored  in  the  snow  banks  and  is  usually  reduced  to  the 
equivalent  of  rain  simultaneously  with  the  customary 
heavy  rainfall  of  the  early  spring  months.  It  is  quite 
common  for  millions  of  cubic  feet  of  water  to  run  over 
the  falls  and  dams  in  the  streams  during  these  spring 
freshet  periods  which,  if  it  could  be  stored  until  the 
drier  summer  and  fall  months,  would  be  of  wonderful 
utility  in  not  only  maintaining  a  higher  rate  of  flow 
in  those  dry  months,  but  also  doing  away  largely  with 


New  Activities  of  the  State  107 

the  damage  and  inconvenience  incident  to  the  sudden 
run  off  of  flood  waters  in  their  natural  condition. 
These  conditions  point  to  the  necessity  for  large 
water  storage  reservoirs  as  the  only  practical  means 
of  accomplishing  any  considerable  degree  of  regula- 
tion. 

The  construction  of  water  storage  reservoirs  for 
impounding  flood  waters  will  be  beneficial  in  the 
following  ways : 

The  equalization  of  stream  flow  by  storing  the  water 
during  wet  seasons  and  using  the  same  to  increase  the 
volume  of  the  stream  thru  dry  seasons; 

A  consequent  large  increase  in  the  power  value  of 
the  stream,  due  to  augmenting  the  low  water  flow,  and 
thus  doubling  or  trebling  the  dependable  flow  for 
power  purposes; 

A  consequent  decrease  in  the  height  of  freshets, 
thereby  reducing  the  great  pecuniary  damages  caused 
by  the  periodic  recurrence  of  floods; 

By  increasing  the  low  water  flow  of  polluted  streams 
a  dilution  would  result  which  would  improve  the  sani- 
tary conditions  of  the  stream; 

Navigation  would  be  benefited  by  a  higher  stage  of 
water  on  the  lower  reaches  of  the  rivers; 

The  extension  of  transportation  facilities,  often  to 
an  important  and  desirable  extent,  by  navigation  on 
the  proposed  reservoirs ; 

The  lowlands  of  the  river  valleys  could  be  made 
more  tenable,  and  their  agricultural  products 
increased  by  reducing  the  contingency  of  floods; 

The  perpetual  submergence  of  extensive  tracts  of 
swamp  lands,  which  are  now  unsightly  and  a  menace 
to  health,  would  be  possible ; 

The  creation  of  extensive  lakes  with  beautiful 
shores  offering  desirable  locations  for  permanent 
homes  and  great  attractions  to  summer  visitors  seek- 
ing recreation;  and 

Inestimable  indirect  benefit  to  the  State  due  to  the 


108  Taxation  in  New  York 

stimulation  of  industrial  enterprises,  the  increase  in 
number  and  prosperity  of  the  people,  and  the  creation 
of  taxable  wealth  by  the  progressive  development  of 
water  power. 

The  State  conservation  commission  has  made 
extensive  surveys  of  the  most  important  rivers  and 
basins  which  might  be  used  to  form  reservoirs  to  fur- 
nish additional  water  power  for  the  industries  of  the 
State. 

The  Sacandaga  project  is  to  construct  a  dam  at 
Conkling-ville  on  the  Sacandaga  river  to  create  a  stor- 
age reservoir  of  twenty-nine  billion  cubic  feet  capac- 
ity and  to  convert  thirty  miles  of  the  present  river 
valley  into  an  artificial  lake  of  the  same  size  as  Lake 
George.  The  cost  of  this  reservoir  would  probably  be 
from  five  to  six  million  dollars.  Another  project  is 
to  construct  a  storage  reservoir  on  the  Schroon  River 
of  sixteen  billion  cubic  feet  capacity. 

The  arguments  presented  by  the  State  conservation 
commission  in  favor  of  the  State's  undertaking  this 
work  are  as  follows:  First,  the  project  involves  the 
flooding  of  thousands  of  acres  of  land,  and  to  be  suc- 
cessfully executed  the  power  of  eminent  domain 
would  have  to  be  invoked.  Eminent  domain  is  the 
right  the  State  has  of  taking  private  property  for 
public  use  on  paying  its  value.  Private  property  can- 
not be  taken  for  private  use.  However,  railroads  and 
canals  are  considered  public  necessities  and  the  State 
allows  the  power  of  eminent  domain  to  be  exercised 
for  their  construction.  The  constitution  would  have 
to  be  amended  to  allow  private  enterprise  to  develop 
water  power  thru  the  exercise  of  the  power  of  eminent 
domain. 

Second.  Development  by  the  State  ensures  the 
fullest  possible  utilization  of  the  power  possibilities  of 
each  stream,  whereas  development  by  uncontrolled 
private  enterprise  often  involves  waste  of  resources. 
Private  capital,  seeking  the  greatest  possible  imme- 


New  Activities  of  the  State  109 

diate  return  on  the  investment,  naturally  confines  its 
attention  to  the  most  concenrated  portion  of  a  given 
fall.  The  less  precipitous  portions  of  the  fall  above  and 
below,  involving  a  large  unit  outlay  in  development,  are 
consequently  apt  to  be  neglected,  and  in  too  many 
cases  permanently  wasted,  because  no  other  en'ter- 
prise  is  likely  to  undertake  their  development  after- 
ward, even  if  the  rights  of  the  company  already  on 
the  spot  would  permit  this  to  be  done. 

Third.  State  supervision  is  needed  to  insure  the 
safety  of  the  construction  and  maintenance  of  the 
dams.  No  catastrophe  similar  to  the  Johnstown 
flood  of  May  31,  1889,  is  desired  in  this  State,  when  six 
thousand  persons  lost  their  lives  thru  the  bursting 
of  a  huge  dam  at  the  head  of  the  Conemaugh  River 
which  had  originally  been  constructed  for  the  old 
Pennsylvania  Canal  but  afterward  became  the 
property  of  a  fishing  club  and  no  attention  had  been 
paid  to  its  stability.  Human  life  is  too  valuable  to  be 
endangered  by  poorly  constructed  reservoirs. 

Fourth.  The  State  has  greater  financial  strength 
and  can  borrow  funds  at  a  lower  rate  of  interest  than 
private  companies.  One  of  the  reasons  why  the  City 
of  New  York  in  1913  entered  into  the  dual  subway 
system  was  that  the  municipality  could  borrow  money 
for  the  construction  of  the  subways  at  a  lower  rate  of 
interest  than  private  companies  could.  Thus  the 
State  with  its  greater  power  and  scope  and  with  finan- 
cial resources  enabling  it  to  defer  the  return  on  its 
investment  could  undertake  the  construction  of  the 
more  extensive  works  necessary  to  develop  the  full 
extent  of  the  falls  of  our  rivers  and  streams.  It  is 
clear  that  the  State  is  the  only  authority  with  sufficient 
power  to  insure  the  complete  development  of  each 
and  every  stream  so  that  every  foot  pound  of  energy 
represented  by  its  falling  power  may  be  given  up 
when  necessary  to  the  service  of  man. 


110  Taxation  in  New  Yoek 

Fifth.  Which  is  perhaps  the  most  important  argu- 
ment presented,  is  that  State  action  will  insure  the 
equal  participation  of  all  citizens  in  this  form  of 
natural  wealth,  which  is  particularly  the  heritage  of 
the  whole  people.  The  prime  inclusive  reason  for  the 
exercise  of  State  authority  over  the  control  of  stream 
flow  for  power  development  is  that  under  modern 
social  and  economic  conditions  this  step  is  necessary 
to  ensure  the  equal  participation  of  all  citizens  in  this 
form  of  natural  wealth.  It  appears  that  from  all 
points  of  view  the  State  is  the  proper  authority  to 
undertake  and  carry  out  the  conservation  of  its  own 
water  resources. 

As  the  supply  of  coal  in  this  country  is  becoming 
scarcer  and  the  Encyclopedia  Americana  states  that 
at  the  present  rate  of  consumption  per  year  the  supply 
of  anthracite  coal  in  this  country  will  be  exhausted  in 
fifty  years,  will  it  not  be  necessary  in  time  to  use  the 
State's  vast  water  power  now  going  to  waste  to  heat 
electrically  the  homes  of  the  people  ?  Other  prominent 
scientists  estimate  that  our  coal  supply  will  be 
exhausted  in  less  time  than  fifty  years.  The  opinion 
expressed  by  the  Encyclopedia  Americana  was  pre- 
pared by  Samuel  Sanford,  a  Harvard  graduate,  who 
made  a  careful  study  of  the  coal  situation  in  this 
country.  For  a  number  of  years  he  w^as  connected 
with  the  United  States  Geological  Survey  and  also  with 
the  United  States  Bureau  of  Mines.  The  question 
arises,  is  there  water  power  enough  to  heat  electrically 
the  three  million  homes  in  New  York  State?  Accord- 
ing to  the  United  States  fuel  administration  there  w^as 
consumed  in  New  York  State  for  the  coal  year  ending 
March  31,  1917,  twenty  million  tons  of  anthracite  coal, 
of  which  fourteen  million  tons  Avere  of  domestic  sizes 
and  six  million  tons  were  of  steam  sizes.  The  domestic 
sizes  were  probably  used  for  domestic  purpose^  and 
the  steam  sizes  were  probably  used  for  industrial 
purposes.     The    United    States    fuel    administration 


New  Activities  of  the  State  111 

state  that  thej^  are  unable  to  report  the  amount  of 
bituminous  coal  consumed  in  New  York  State. 

The  problem  now  is  whether  the  two  to  seven  mil- 
lion horsepower  available  from  the  water  develop- 
ment of  the  State  is  sufficient  to  heat  the  three  million 
homes  electrical^  the  coldest  day  of  the  year.  This 
two  to  seven  million  horsepower  is  available  every  day 
of  the  year,  while  the  twenty  millions  tons  of  anthra- 
cite coal  is  the  amount  consumed  in  the  whole  365  days 
of  the  year  and  there  is  no  way  of  determining  the 
amount  consumed  on  the  coldest  day  of  the  year. 

In  transfarming  the  horsepower  of  electricity  to 
heat  there  is  absolutely  no  waste,  while  in  transform- 
ing coal  to  horsepower  only  sixteen  to  twentj^  per 
cent,  of  the  heat  is  obtained.  Comparison  of  the  horse- 
power of  electricity  and  the  horsepower  of  coal  is  not 
a  true  test.  Again  in  our  modern  heating  furnaces 
at  least  twenty  per  cent,  of  the  heat  goes  up  the 
chimney  and  is  lost.  In  order  to  obtain  combustion 
part  of  the  gases  are  never  consumed  and  so  the  full 
heat  value  of  the  coal  is  never  obtained.  There  is  also  a 
great  waste  of  coal  in  every  home. 

Perhaps  the  best  comparison  is  by  stating  the  num- 
ber of  British  thermal  units  in  the  coal  consumed  and 
in  the  maximum  water  power  of  the  State.  A  British 
thermal  unit  is  the  quantity  of  heat  required  to  raise 
the  temperature  of  a  pound  of  water  one  degree 
Farnheit  in  temperature.  On  an  average  one  pound 
of  coal  is  equivalent  to  thirteen  thousand  British  ther- 
mal units.  Assuming  that  of  the  fourteen  million 
tons  of  domestic  sizes  of  coal  that  two  million  tons  are 
used  for  cooking  and  for  other  purposes  and  that 
twenty  per  cent,  of  the  remaining  twelve  million  tons 
is  lost  thru  the  heat  going  up  the  chimney  there 
still  remains  over  nine  million  tons  from  which  heat  is 
obtained.  Again  assuming  that  fires  for  heating  pur- 
poses are  started  in  the  homes  the  fifteenth  of  Sep- 


112  Taxation  in  New  York 

tember  and  continue  until  the  fifteenth  of  May,  a 
heating  period  of  two  hundred  and  forty-two  days,  an 
average  of  forty  thousand  tons  of  coal  a  day  are  con- 
sumed to  heat  the  three  million  homes  of  New  York 
State.  This  sum  expressed  in  pounds  and  multiplied 
by  thirteen  thousand  gives  over  one  trillion  British 
thermal  units  as  contained  in  coal  used  for  heating 
purposes. 

Again  one  horsepower  is  equivalent  to  two  thousand 
five  hundred  and  forty-five  British  thermal  units. 
Taking  seven  million  horsepower  as  the  maximum 
amount  obtainable  from  the  water  development  of  the 
State  and  multiplying  this  sum  by  two  thousand  five 
hundred  and  forty-five  and  then  multiplying  this 
product  by  twenty-four  and  a  little  over  four  hundred 
billion  British  thermal  units  are  produced  as  the 
extent  of  heat  obtainable  by  electricity  from  the  water 
power  of  the  State  for  the  coldest  day  of  the  year. 
Apparently  then  but  two-fifths  of  the  heat  necessary 
to  heat  the  three  million  homes  of  New  York  State  can 
be  obtained  from  the  water  power  of  the  common- 
wealth. Even  tho  it  is  impossible  to  heat  all  the 
homes  electrically  from  the  water  power  of  the  State 
now  going  to  waste,  yet  the  time  may  come  when  the 
State  will  be  obliged  to  develop  its  water  power  for 
manufacturing  and  heating  purposes. 

Governor  Charles  Seymour  Whitman  in  his  annual 
message  to  the  Legislature  in  January,  1918,  spoke  of 
the  prevailing  scarcity  of  nitrogen  for  fertilizers 
which  could  be  alleviated  by  water  power  develop- 
ment. He  said:  ''  Nitrogen,  so  necessary  to  the 
farmer,  now  costs  him  thirty-five  cents  a  pound  in 
nitrate  of  soda,  while  in  Norway  nitrogen  is  produced 
by  hydro-electric  power  at  a  cost  of  seven  cents  a 
pound."  The  government  does  not  yet  appreciate  its 
responsibilities  in  this  all  important  situation  of  the 
fertilizer  problem  and  the  American  public  remains 
in  ignorance  of  the  pressing  exigency.     It  is  every- 


New  Activities  of  the  State  113 

body's  duty  to  assist  in  shaping  a  course  of  effective 
action. 

The  elements  of  which  the  soil  is  most  quickly 
depleted  are  phosphorus,  nitrogen  and  potassium  and 
obtaining  an  adequate  supply  of  these  three  substances 
is  most  necessary  in  order  to  prevent  the  production 
of  food  from  falling  down.  To  the  farmer  such  fer- 
tilizers are  as  necessary  as  food  to  eat  is  to  the  ordi- 
nary citizen.  Nitrogen  can  be  manufactured  from  the 
atmosphere,  but  air  reduction  of  nitrogen  is  in  its 
infancy  in  this  country.  The  unused  water  power  could 
well  be  harnessed  to  the  manufacture  of  nitrogen  from 
the  atmosphere. 

Air  contains  about  eighty  per  cent,  of  nitrogen.  The 
inventor  of  the  electro-chemical  process  for  manu- 
facturing nitrate  fertilizers  and  other  chemical  pro- 
ductions from  the  air  was  Professor  Birkeland,  a 
Norwegian.  This  process  is  to  pass  air  thru  an 
enormous  electrical  flame  of  about  seventy-five  inches 
in  width  which  heats  the  air  to  a  very  high  tempera- 
ture, and  the  gases  are  then  cooled  and  passed  over 
lime  in  water,  resulting  in  calcium  nitrate,  which  is 
sold  in  granular  form  like  salt. 

The  conservation  of  the  soil  is  unquestionably  one 
of  the  most  important,  as  well  as  the  most  neglected, 
phases  of  the  conservation  movement  in  the  State  of 
New  York.  The  published  map  of  the  United  States 
geological  survey  show  nearly  three  hundred  thousand 
acres  of  swamp  land  in  the  State,  all  of  which  is  too 
wet  for  cultivation.  The  largest  area  of  swamp  land 
lies  in  Oswego  County,  consisting  of  over  forty-six 
thousand  acres.  The  importance  of  reclaiming  and 
improving  this  vast  area  of  swamp  land  thruout  the 
State  cannot  be  overestimated. 

Provision  for  a  pure  and  adequate  supply  of  water 
for  domestic  purposes  for  all  its  inhabitants  is  one  of 
the    first   duties    of   the    sovereign    State.     Thru   its 


114  Taxation  in  New  York 

important  effect  upon  public  health  alone,  the  general 
use  of  pure  water  is  a  matter  of  the  greatest  importance 
to  every  man,  woman  and  child  regardless  of  local 
divisions  of  government  or  groupings  of  citizens.  It 
must  be  conceded  that  the  value  of  water  for  potable 
and  domestic  purposes  cannot  be  estimated  in  dollars 
and  cents,  constituting  as  it  does  a  necessity  of  life  for 
which  no  substitute  exists.  Its  money  value  is  repre- 
sented by  whatever  it  costs  to  obtain  the  supply,  be 
that  much  or  little.  The  State  conservation  commis- 
sion asserts  that  one  hundred  gallons  per  capita  per 
day  is  enough  water  for  all  the  usual  needs  of  a  munic- 
ipality. Their  1914  annual  report  to  the  Legislature 
gave  five  cities  of  the  State  which  exceeded  this  amount 
of  which  Kingston  led  with  a  daily  consumption  of 
water  per  capita  of  two  hundred  and  thirty  gallons. 
With  our  present  population  of  ten  million  people 
a  daily  consumption  of  one  hundred  gallons  of  water  a 
day  by  each  citizen  would  mean  a  daily  consumption 
of  one  billion  gallons  of  water.  Instead  of  leaving 
each  locality  to  provide  its  own  water  should  not  the 
State  provide  water  for  all  its  people? 

In  Massachusetts  the  Metropolitan  Water  Board, 
which  is  a  State  body,  supplies  with  water  the  cities 
of  Boston,  Chelsea,  Everett,  Maiden,  Medf  ord,  Newton 
and  Somerville. 

The  proper  distribution  of  food  products  from  the 
producer  to  the  consumer  is  a  matter  of  growing 
importance.  Can  this  be  done  better  by  the  State  or 
by  co-operative  associations  among  the  farmers  them- 
selves? The  consumer  pays  enormously  high  prices 
for  all  his  food  products  while  the  producer  receives 
for  his  hard  labor  about  one-third  of  the  selling  price 
of  each  article.  Something  is  fundamentally  wrong 
when  two-thirds  of  the  selling  price  of  food  products 
go  into  other  hands  instead  of  to  the  producer.  The 
result  is  a  lack  of  intensive  farming  and  a  diminished 
supply  of  food.    If  the  people  of  the  State  are  to  con- 


New  Activities  of  the  State  115 

tinue  to  eat  they  must  see  that  justice  is  done  the 
farmer  who  produces  his  food. 

In  California  the  California  Fruit  Grrowers'  Asso- 
ciation, which  integrates  the  marketing  of  upwards  of 
seventy  per  cent,  of  the  California  citrus  crop,  is  the 
most  conspicuous  example  of  success  in  a  large  scale 
organization  of  a  co-operative  plan.  Eight  thousand 
growers  make  up  the  membership  of  one  hundred  and 
seventeen  local  associations.  These  are  grouped  into 
seventeen  district  exchanges  which  coalesce  to  form 
the  central  exchange. 

There  is  a  great  waste  in  this  State  from  not  utilizing 
the  sewage  of  our  cities  and  villages.  The  earth's  sur- 
face consists  of  but  a  thin  layer  of  fertile  soil  over  the 
rock  which  constitutes  our  planetary  existence.  In 
some  places  this  soil  is  deeper  than  in  other  places, 
while  in  places  the  rock  itself  is  upon  the  surface.  But 
everywhere  the  soil  is  becoming  poorer  and  poorer 
because  man  is  continually  takng  off  and  seldom 
putting  anything  back  to  continue  its  fertility.  Accord- 
ing to  the  census  of  1845  New  York  State  raised  that 
year  2,897,062  pounds  of  flax.  To-day  New  York  State 
raises  practically  no  flax  at  all.  Flax  requires  a  very 
rich  soil,  and  the  soil  in  this  State  has  become  too  poor 
to  grow  flax  at  the  present  time.  From  flax  is  made 
linseed  oil  used  to  paint  with,  and  as  yet  no  substitute 
for  linseed  oil  for  painting  purposes  has  been 
discovered. 

The  State  council  of  farms  and  markets  estimates 
that  the  sewage  wasted  by  cities  of  the  State  amounts 
to  nearly  ten  dollars  per  capita  per  annum.  But 
the  Metropolitan  sewage  commission  in  their  1914 
report  states  that  the  manurial  value  of  sewage 
amounts  to  only  $1.25  per  capita  per  year.  But  if  this 
sewage  could  be  put  back  upon  the  land  to  increase  its 
fertility  instead  of  being  cast  into  the  streams  to  pol- 


116  Taxation  in  New  York 

lute  their  waters  and  finally  be  washed  out  to  sea,  there 
would  be  a  great  saving. 

How  dramatically  Victor  Hugo  exclaims  in  his  ' '  Les 
Miserables,"  that  Paris  casts  twenty-five  million  francs 
annually  into  the  sea :    He  says : 

' '  All  the  human  and  animal  manure  which  the  world 
loses,  if  returned  to  the  land  instead  of  being  thrown 
into  the  sea,  w^ould  suffice  to  nourish  the  world. 

The  very  substance  of  the  people  is  borne  away,  here 
drop  by  drop,  and  there  in  streams,  by  the  wretched 
vomiting  of  the  sewer  of  our  sewers  into  the  rivers,  and 
the  gigantic  vomiting  of  our  rivers  into  the  ocean. 
.  .  .  This  has  two  results, — the  earth  impoverished 
and  the  water  poisoned." 

Following  the  agitation  of  Victor  Hugo  and  others 
the  City  of  Paris  began  in  1867  irrigation  upon  a  small 
scale  on  a  small  experimental  plot  at  Clichy.  This 
proved  so  successful  that  in  1869  the  city  extended  its 
sewage  disposal  to  lands  at  Gennevilliers.  About  one 
hundred  and  eighty-five  million  gallons  of  sewage  per 
day  are  returned  to  fertilize  the  land  by  the  City  of 
Paris  at  the  present  time. 

The  City  of  Berlin  in  Germany  was  not  long  in 
imitating  Paris  in  its  disposal  of  sewage  and  at  present 
the  sewage  farms  about  Berlin  comprise  about  forty- 
three  thouisand  and  four  hundred  acres  in  extent. 
Berlin  is  divided  into  twelve  parts  for  the  purpose  of 
sewage  with  a  central  collecting  station  at  the  lowest 
point  in  each.  From  this  lowest  point  the  sewage  is 
pumped  to  farm  lands  which  lie  at  a  distance  to  the 
north  and  south  of  the  city.  About  one-half  of  the 
fresh  vegetables  consumed  in  the  City  of  Berlin  are 
said  to  be  derived  from  the  sewage  farms. 


New  Activities  of  the  State  117 

According  to  the  annual  report  of  the  New  York 
State  Insurance  Department  for  the  year  ending 
December  31,  1917,  the  fire  and  marine  insurance  com- 
panies doing  business  in  this  State  collected  in 
premiums  $532,644,324,  but  paid  out  in  fire  losses 
only  $244,254,233.  There  is  something  fundamentally 
wrong  when  the  people  have  to  pay  double  for  what 
they  are  receiving.  Anyone  taking  the  time  to  study  the 
annual  reports  of  the  insurance  department  can  soon 
acquaint  themselves  with  the  large  dividends  and  also 
stock  dividends  being  paid  by  insurance  companies. 
The  1914  annual  report  of  Rufus  M.  Potts,  insurance 
superintendent  of  the  State  of  Illinois,  discussed  the 
subject  very  exhaustively.  He  says  that  there  is  no 
other  business  of  similar  magnitude  in  the  United 
States  which  enjoys  such  enormous  profits  as  the  fire 
insurance  business.  This  is  what  Superintendent  Potts 
says  in  part  about  excessive  profits  : 

'■ '  The  profit  in  1913  of  the  Hartford  Fire  Insurance 
Company  was  the  enormous  figure  of  119.3  per  cent., 
of  the  Continental  92.7  per  cent.,  of  the  German  Ameri- 
can 86.7  per  cent.,  of  the  American  67.6  per  cent.,  of  the 
Boston  54.5  per  cent.,  of  the  Buffalo  German  72.7  per 
cent.  To  more  specifically  illustrate  these  profits  I 
will  take  for  an  example  the  Continental  Insurance 
Company.  This  company  has  a  capital  stock  of  two 
million  dollars,  and  in  1913  declared  a  dividend  of  one 
million  dollars,  or  fifty  per  cent.  During  the  past 
five  years,  1909  to  1913,  inclusive,  this  company  has 
declared  dividends  amounting  to  $5,200,252,  or  at  the 
rate  of  over  one  million  per  3^ear.  In  addition  to  this, 
it  has  increased  its  assets,  the  property  of  its  stock- 
holders, over  five  million  three  hundred  thousand  dol- 
lars; also  at  the  rate  of  over  one  million  per  year,  or 
the  equivalent  of  another  fifty  per  cent  di\4dend  each 
3^ear.  The  income  upon  this  stock,  therefore,  has  been 
over  one  hundred  per  cent  per  year  for  the  past  five 
years. ' ' 


118  Taxation  in  New  Yoek 

Fires  are  misfortunes,  and  it  is  in  violation  of  all 
ethics  and  rules  of  public  policy  that  institutions  should 
not  only  profit  from,  but  build  up  and  control  a  business 
for  profit  only,  based  solely  upon  the  misfortunes  of  our 
people.  That  our  citizens  are  bearing  an  excessive 
burden  and  are  sorely  oppressed  by  the  present  system 
of  fire  insurance  must  be  admitted  by  all.  Fire  insur- 
ance is  essentially  a  tax  for  the  purpose  of  spreading 
the  loss  caused  by  fire  to  certain  unfortunate  individu- 
als among  the  members  of  the  whole  community  and 
so  lessening  the  burden  of  each.  Public  fire  insurance, 
either  by  the  state,  province,  canton,  city  or  commune 
was  the  original  and  long  the  only  form  of  fire  insur- 
ance in  most  European  countries,  and  this  state  insur- 
ance still  flourishes  vigorously  in  those  countries, 
altho  mutual-  and  stock  company  insurance  is  now 
found  in  all.  When  we  realize  that  the  American 
people  are  paying  for  fire  losses  at  the  rate  of  $2.50 
per  capita,  w^hile  in  most  European  countries  the  rate 
is  twenty-five  to  thirty  cents  per  capita,  we  must  con- 
clude that  a  change  of  some  kind  is  needed. 

Fire  insurance  under  modern  commercial  conditions 
is  practically  compulsory.  This  comes  from  the  fact 
that  most  mercantile,  manufacturing  and  other  busi- 
ness is  done  on  credit.  Credit  will  not  be  extended  to 
a  merchant,  manufacturer,  or  business  man,  unless  his 
stock  of  goods,  merchandise  in  transit,  or  articles  in 
the  process  of  manufacture  are  fully  covered  by  insur- 
ance. Neither  can  loans  be  secured  on  real  estate  un- 
less all  buildings  are  fully  insured.  The  insurance 
business  is  of  direct  personal  interest  to  every  citizen 
of  the  State  of  New  York. 

The  question  arises  what  has  all  these  activities  to 
do  with  taxation  and  the  answer  is  that  everything  the 
States  does  has  to  be  done  eventually  thru  taxation. 
Taxation  is  not  an  isolated  subject  remote  and  discon- 
nected from  all  the  other  activities  of  the  State.  On 
the  contrary  it  is  intimately  related  to  and  bound  ud 


New  Activities  of  the  State  119 

with  every  activity  of  government.  What  is  it  going 
to  cost  and  where  is  the  money  coming  from  are  always 
first  questions.  The  great  problem  is  always  to  have 
the  cost  equitably  distributed  among  the  people  of  the 
State  according  to  their  ability  to  pay.  The  feeling 
that  there  is  going  to  be  inequity  in  the  distribution  of 
the  cost  defeats  many  good  projects  and  the  feeling 
that  they  are  not  going  to  pay  the  cost  but  someone 
else  is  going  to  pay  it  for  them  causes  many  to  advo- 
cate foolish  and  wasteful  expenditures  of  money  by 
the  government.  Probably  in  no  other  domain  of 
governmental  activity  is  there  so  much  injustice  and 
inequity  as  there  is  in  taxation. 

The  laissez-faire  school  of  economists  will  tell  us  that 
these  things  are  not  the  function  of  government.  Per- 
haps they  are  not.  But  eventually  our  coal  supply  will 
be  exhausted  and  if  the  government  does  not  provide 
a  way  for  the  heating  of  the  State's  three  million 
homes,  who  will?  Whatever  can  be  done  better  pri- 
vately should  be  done  that  way.  But  it  is  sometimes 
difficult  to  define  just  what  the  function  of  the  govern- 
ment is. 


CHAPTER  IX 
TAXING   MANUFACTURING   COMPANIES 

When  the  corporation  tax  law  was  first  passed  in 
1880,  manufacturing-  companies  were  exempted  on  the 
ground  that  it  would  drive  industry  out  of  the  State. 
After  a  period  of  thirty-seven  years  New  York  has  at 
last  in  1917  imposed  a  State  tax  on  manufacturing 
companies. 

The  act  of  1917  imposes  a  State  tax  of  three  per 
cent  on  the  net  earnings  of  manufacturing  and  mercan- 
tile companies,  but  exempts  them  from  a  local  tax  on 
their  personal  property  and  also  exempts  them  from 
a  local  tax  on  their  machinery  and  equipment.  The 
total  receipts  from  this  new  tax  for  the  first  year  of  its 
operation  was  $14,769,275,  two-thirds  of  which  was 
reserved  by  the  State  government  and  the  remaining 
one-third  returned  to  the  localities  to  aid  in  supporting 
the  local  government.  All  of  the  receipts  from  the  tax 
on  manufacturing  and  mercantile  companies  should 
go  to  the  localities  as  it  supersedes  a  former  tax 
imposed  by  the  localities. 

The  former  corporation  taxes  imposed  a  tax  on 
capital  stock  and  gross  earnings.  This  act  imposes 
a  tax  on  net  earnings  of  manufacturing  and  mercantile 
companies.  Here  is  a  departure  from  the  previously 
established  rule  of  the  State. 

In  1801  the  Legislature  exempted  from  taxation  for 
a  term  of  five  years  the  lands,  buildings,  improvements, 
premises  and  appurtenances,  called  and  known  by  the 
name  of  the  Hamilton  Manufacturing  Society,  and 
everything  appertaining  in  and  to  the  carr>nng  on  the 
manufacture  of  glass,  together  with  the  buildings  of 
the  workmen  about  the  same.  In  1817  the  Legislature 
enacted  that  all  cotton,  woolen  and  linen  manufactories 
in  the  State  should  be  exempted  from  taxation.     The 

[120] 


Taxing  Manufacturing  Companies  121 

courts  afterwards  held  that  this  act  was  repealed  by 
the  general  tax  law  passed  in  1823. 

Altho  manufacturing  had  a  much  tardier  develop- 
ment in  New  York  than  in  Pennsyvania  and  the  New 
England  states,  yet  by  the  census  of  1830  this  state 
had  assumed  the  priority  among  the  American  com- 
monwealths in  manufacturing.  But  it  was  not  until 
1870  that  the  manufactured  products  of  the  State 
exceeded  in  value  the  agricultural  products.  Accord- 
ing to  the  census  of  1840  there  were  in  New  York  State 
at  that  time  455,954  persons  employed  in  agriculture 
and  173,193  persons  employed  in  manufactures.  The 
1914  United  States  census  bulletin  on  manufactures 
gives  the  present  number  of  wage  earners  employed 
in  manufactures  in  the  State  to  be  1,057,857  and  the 
value  of  the  manufactured  products  to  be  $3,814,661,- 
114.  There  are  six  times  as  many  people  employed  in 
manufactories  in  the  State  to-day  as  there  were  seventy 
years  ago,  but  the  number  employed  in  agriculture 
has  decreased  materially. 

In  the  early  days  much  of  the  manufacturing  was 
done  in  the  homes.  New  York's  textile  products  in 
1810  were  as  follows: 

Cotton  goods  made  in  families 216,013  yards 

Woolen  goods  made  in  families 3,257,812  yards 

Linen  goods  made  in  families 5,372,645  yards 

Fulling  mills,  427  in  number 1,811,005  yards 

Domestic  manufactures  continued  to  increase  until 
1825  when  fifteen  million  yards  of  cloth  were  made  in 
homes.  After  that  it  began  to  decrease,  and  in  1855 
only  928,675  yards  of  cloth  were  made  in  homes. 

New  York  was  eminently  fitted  by  both  situation  and 
natural  resources  to  become  a  great  industrial  and 
commercial  state.  Economical  traiisportation  and 
cheap  power  furnished  by  railroads,  watemvays  and 
canals  made  possible  the  growth  of  manufacturing 
centers  and  these  in  turn  increased  the  volume  of  traffic 


122  Taxation  in  New  York 

to  be  transported.  Possessing  a  great  commercial 
center  in  New  York  City,  the  people  of  the  State  have 
not  lacked  for  capital  to  develop  their  industries  and 
the  tide  of  immigation  which  passes  thru  the  metropo- 
lis has  furnished  an  abundant  suppy  of  labor.  These 
advantages  of  New  York  as  a  manufacturing  state  are 
continuous  and  cumulative ;  and  in  looking  toward  the 
future  development  there  must  be  added  its  proximity 
to  the  coal  fields  of  Pennsylvania,  and  also  the  abund- 
ant supply  of  water  power  which,  when  transmitted 
into  electrical  energy  can  run  all  the  factories  of  the 
commonwealth  and  furnish  adequate  transportation 
facilities. 

Bishop,  in  his  "  History  of  American  Manufac- 
tures," gives  as  an  additional  reason  for  the  growth  of 
manufacturing  in  New  York  State  that  this  common- 
wealth was  one  of  the  most  progressive  of  the  states  in 
encouraging  the  owners  of  capital,  especially  the  hold- 
ers of  small  amounts  of  wealth,  to  unite  their  savings 
and  invest  them  in  business  under  a  corporation  law 
that  secured  to  them  limited  liability  and  other 
advantages. 

According  to  the  1914  United  States  census  bulletin 
on  manufactures  the  clothing  industry  is  the  leading 
manufacturing  industry  of  the  State,  having  189,763 
wage  earners,  and  the  value  of  the  manufactured  pro- 
ducts being  $583,942,333.  The  next  industry  is  that  of 
printing  and  publishing  with  64,020  wage  earners,  and 
the  value  of  the  manufactured  products  being  $257,- 
268,671.  The  textile  industry  comes  third  with  91,041 
wage  earners  and  manufactured  products  to  the  value 
of  $194,730,543.  Our  foundry  and  machine  shop 
products,  slaughtering  and  meat  packing,  liquors, 
tobacco  manufacture,  lumber  and  timber  products 
follow  in  the  order  named. 

There  is  a  great  diversity  in  New  lYork's  manufac- 
tures. Of  the  one  hundred  and  eighty-nine  thousand 
wage  earners  employed  in  the  clothing  industry  one 


Taxing  Manufacturing  Companies  123 

hundred  and  seventy  thousand  are  employed  in  New 
York  City.  That  the  clothing  industry  is  largely  cen- 
tered in  New  York  City  is  due  principally  to  the  vast 
immigration  entering  the  metropolis  and  resulting  in 
cheap  labor.  Some  of  this  clothing  is  made  in  sweat 
shops.  The  clothing  industry  of  this  State  forms  56.8 
per  cent  of  the  total  value  of  products  for  this  industry 
for  the  whole  United  States.  Of  the  sixty-four  thou- 
sand wage  earners  employed  in  the  printing  and  pub- 
lishing industry  fifty-one  thousand  are  employed  in 
New  York  City.  Being  the  largest  city  in  the  land 
accounts  for  many  newspapers,  magazines,  periodicals 
and  books  published  there,  which  have  a  circulation 
all  over  the  country.  The  printing  and  publishing 
industry  of  this  State  forms  28.5  per  cent  of  the  total 
value  of  products  for  this  industry  in  the  whole  United 
States. 

Some  of  the  products  in  which  New  York  State  ranks 
first  in  the  manufacture  of,  are  the  following :  Hosiery 
and  knit  goods;  carpets  and  rugs;  tobacco  manufac- 
tures; malt  liquors;  electrical  machinerj^,  apparatus 
and  supplies;  millinery  and  lace  goods;  paper  and 
wood  pulp;  illuminating  and  heating  gas;  furniture; 
men's  furnishing  goods;  copper,  tin  and  sheet  iron 
products;  chemicals;  photographic  apparatus  and 
materials;  pianos,  organs  and  materials;  paints  and 
varnish ;  fur  goods ;  etc. 

New  York  City  is  the  industrial  metropolis  of  the 
United  States,  holding  first  place  in  the  value  of  all 
manufactured  products.  In  1914  the  value  of  New 
York  City's  manufactured  products  exceeded  that  of 
any  state  of  the  Union,  except  Pennsylvania.  Glovers- 
ville  and  Johnstown  are  the  seat  of  the  glove  industry. 
More  than  half  of  the  gloves,  mittens  and  gauntlets 
manufactured  in  the  United  States  in  1914  were  made 
in  this  State.  The  production  of  chemicals  by  the  use 
of  electricity  has  had  a  marked  effect  on  the  develop- 
ment of  the  industry  in  New  York  State  in  recent 


124  Taxation  in  New  Yoek 

years.  Niagara  Falls  is  the  seat  of  the  chemical  indus- 
try. Troy  is  the  seat  of  the  collar  and  cuff  industry 
and  Schenectady  leads  in  the  manufacture  of  electrical 
machinery,  apparatus  and  supplies. 

The  preponderance  of  manufactures  is  in  the  cities 
as  85.5  per  cent  of  the  wage  earners  employed  in  manu- 
facturing industries  .are  located  in  cities  having  a 
jDopulation  of  ten  thousand  or  over.  Better  and  cheaper 
shipping  facilities  account  for  the  location  of  manufac- 
turing in  the  cities.  Among  the  adult  wage  earners  in 
manufacturing  industries  in  this  commonwealth  in 
1914,  there  were  740,881  males  and  308,554  females. 
The  industries  which  gave  employment  to  the  greatest 
number  of  women  were  clothing,  textiles,  men's  fur- 
nishing goods  and  tobacco.  Female  wage  earners  pre- 
dominate in  Troy  where  51.8  per  cent  of  those  employed 
were  females.  Glens  Falls  and  Amsterdam  show  the 
next  largest  proportion  of  female  wage  earners. 

Of  all  industries  of  modern  civilization,  manufac- 
turing receives  the  most  favors  from  society.  Neither 
agriculture,  mining,  lumbering,  shipping,  or  any  other 
industry  is  treated  so  leniently.  Communities  vie  with 
each  other  to  secure  manufacturing  plants.  All  sorts 
of  inducements  are  offered,  such  as  free  sites,  low 
taxation,  abundant  labor,  cheap  shipping  facilities,  and 
the  like.  After  manufacturing  plants  have  located  in 
the  city  or  to^^^l  they  are  treated  with  the  utmost  con- 
sideration for  fear  they  may  move  elsewhere.  It  is 
felt  that  the  prosperity  of  the  city  or  town  in  a  large 
measure  depends  upon  the  prosperity  of  its  manufac- 
turing plants.  When  as  sometimes  happens  a  large 
manufacturing  plant  is  the  principal  industry  of  the 
town,  such  a  community  is  helpless  to  deal  justly  with 
an  industrial  corporation  more  powerful  than  the 
municipality  itself. 

Few  realize  the  tremendous  growth  in  manufactur- 
ing the  world  over  in  the  last  fifty  years.  In  the  United 
States  in  the  last  half  of  the  nineteenth  century  while 
the  population  increased  threefold,  the  manufactured 


Taxing  Manufactuking  Companies  125 

products  increased  from  $1,019,000,000  in  1850  to  $13,- 
039,000,000  in  1900.  Said  Carroll  D.  WrigM:  *'  It  is 
incontrovertible  that  the  present  manufacturing  and 
mechanical  plant  of  the  United  States  is  greater  —  far 
greater — than  is  needed  to  supply  the  demand;  yet  it 
is  constantly  being  enlarged,  and  there  is  no  way  of 
preventing  the  enlargement." 

The  same  thing  has  been  happening  in  Europe.  In 
the  last  half  of  the  nineteenth  century  the  population 
of  Europe  increased  fifty  per  cent,  while  its  manufac- 
tures increased  two  hundred  per  cent.  Part  of  the 
increasing  surplus  is  absorbed  by  the  rising  standard 
of  living,  but  such  a  rise,  which  involves  a  change  of 
national  habits,  is  slow,  as  is  also  the  growth  of  the 
population.  On  the  other  hand  the  multiplying  of 
machinery  or  its  increased  effectiveness  not  unfre- 
quently  doubles  the  output  of  a  given  product  in  a 
single  decade.  In  France  in  a  period  of  fifteen  years 
from  1891  to  1906  the  increase  of  machinery  can  be 
judged  from  the  fact  that  the  horsepower  of  its  engines 
increased  over  six  hundred  per  cent  while  the  popula- 
tion of  the  country  remained  practically  stationary. 

Thus  machine  made  products  in  the  four  greatest 
manufacturing  countries  of  the  world,  England,  Ger- 
many, France  and  the  United  States,  are  increasing 
much  faster  than  their  home  consumption.  This  means 
enlarged  markets  abroad.  Is  it  a  mere  coincidence  or 
a  logical  sequence  that  at  the  same  time  this  tremen- 
dous increase  in  manufactures  has  been  taking  place 
there  has  also  been  going  on  by  these  four  great  indus- 
trial nations  colonial  expansion  and  the  building  of 
battleships.  There  must  be  a  colonial  output  for  the 
product  of  machinery  which  is  forever  grinding  its 
increasing  grist.  And  then,  of  course,  there  must  be  a 
nay\^  capable  of  protecting  the  oversea  commerce,  a 
commerce  which  is  essential  to  the  very  life  of  the 
nation.  Does  this  explain  in  part  the  mad  race  which 
manufacturing  nations  have  been  running  in  naval 
construction? 


126  Taxation  in  New  Yoek 

Wherever  manufactured  products  go,  a  desire  will 
be  awakened  on  the  part  of  the  people  to  manufacture 
for  themselves.  First  they  will  manufacture  to  supply 
the  home  demand,  but  when  that  is  supplied  and  their 
machine  products  keep  on  increasing  two  or  three  times 
as  fast  as  home  consumption,  what  will  happen  ?  There 
are  many  who  think  the  underlying  cause  of  the  recent 
world  war  is  an  economic  struggle  for  the  markets 
of  the  world. 

A  table  prepared  by  the  New  York  State  tax  com- 
mission in  1916  showed  that  public  service  corporations 
of  the  State  were  paying  five  and  six-tenths  per  cent. 
of  their  earnings  in  taxes,  while  manufacturing  cor- 
porations of  the  State  were  paying  only  one-half  of 
one  per  cent,  of  their  earnings  in  taxes.  If  statistics 
concerning  the  farmers  of  the  State  could  be  obtained 
it  would  probably  show  that  they  were  paying  the 
highest  percentage  of  their  earnings  in  taxes  than  any 
industry.  In  California  the  1906  State  tax  report  gave 
the  results  of  a  careful  investigation  of  the  relative 
tax  burdens  borne  by  manufacturers  and  agriculture 
in  that  state,  which  showed  that  manufactures  paid 
.34  per  cent,  or  one-third  of  one  per  cent,  of  its  gross 
product  in  taxes,  while  agriculture  paid  6.86  per  cent, 
of  its  gross  product  in  taxes.  As  the  manufactures  of 
New  York  far  exceed  those  of  California  in  value  the 
disparity  in  this  State  must  be  much  greater.  Further- 
more in  California  88.7  per  cent,  of  the  total  value  of 
agriculture  is  invested  in  land  and  buildings,  only  11.3 
per  cent,  being  invested  in  personalty.  On  the  other 
hand  27.9  per  cent,  of  the  total  value  of  manufactures  is 
invested  in  land  and  buildings,  while  72.1  per  cent, 
is  invested  in  personalty.  This  same  ratio  probably 
obtains  thruout  the  country  —  most  of  agriculture  is 
real  estate,  while  most  of  manufactures  is  personalty. 

Why  this  discrimination  in  taxation?  It  must  be 
frankly  admitted  that  it  has  been  the  policj^  of  the 
American  commonwealths  to  favor  the  manufacturing 
industry,  as  compared  with  other  forms  of  wealth. 


Taxing  Manufactuking  Companies  127 

This  policy  has  taken  the  form,  not  only  of  what  is 
equivalent  to  a  lower  rate  of  taxation,  but  also  in  many 
cases  of  an  absolute  exemption  from  taxation.  The 
policy  of  the  states  has  been  directed  toward  accom- 
plishing for  the  industries  within  the  state  somewhat 
the  same  protection  that  has  been  afforded  by  the  Fed- 
eral government  thru  the  means  of  the  protective  tariff 
for  American  industries  in  general.  In  each  case  the 
purpose  of  the  policy  has  been  to  offer  special  advan- 
tages to  the  manufacturers  as  opposed  to  their  com- 
petitors in  other  governmental  districts. 

The  introduction  and  development  of  manufacturing 
industries  in  our  communities  has  followed  somewhat 
the  same  course  as  that  followed  by  transportation  in 
the  middle  of  the  nineteenth  century.  Just  as  counties, 
cities,  towns  and  villages  vied  with  one  another  in 
offering  bonuses  and  other  special  privileges  to  the 
railroads  for  the  purpose  of  inducing  the  railroads  to 
come  thru  their  localities,  so  have  states  and  towns 
competed  with  one  another  in  attracting  capital  of 
manufactures.  The  time  came,  however,  in  the  devel- 
opment of  the  railroads  when  the  communities  saw 
that  they  had  gone  too  far,  and  that  public  policy 
demanded  a  more  conservative  course.  In  this  State  a 
constitutional  amendment  in  1874  prohibited  the  sub- 
divisions of  the  State  from  granting  any  more  public 
aid  to  railroads.  In  the  development  of  manufactures 
the  question  is  now  being  raised  if  the  communities 
have  not  gone  much  farther  than  was  necessary  in 
extending  special  privileges  to  the  manufacturing 
industry.  It  is  interesting  to  note  that  when  the  rail- 
roads were  under  the  supervision  of  the  State  engineer 
and  surveyor  a  report  of  this  official  to  the  Legislature 
in  1858  contained  a  map  of  the  State  showing  the  rail- 
roads constructed  at  that  time,  those  under  construc- 
tion, and  those  projected,  and  according  to  this  map 
apparently  ever}^  hamlet  in  the  State  was  going  to  have 
a  railroad.  Of  course  most  of  these  railroads  were 
nothing   but   paper    railroads    and   were    never    con- 


128  Taxation  in  New  York 

structed,  but  it  illustrates  the  railroad  craze  of  that 
period.  Then  it  was  felt  that  the  prosperity  of  each 
community  depended  upon  its  having  a  railroad ;  while 
to-day  the  remark  is  so  often  heard,  ' '  What  this  town 
needs  is  more  factories."  "What  does  the  State  at 
large  benefit  by  having  one  community  coax  factories 
away  from  some  other  community?  The  gain  of  one 
community  is  simply  the  loss  of  another  community. 

The  present  inequality  in  the  matter  of  taxation  as 
between  the  manufacturing  industry  and  other  indus- 
tries is  very  great.  It  is  improbable  that  the  people 
ever  intended  that  the  discrepancy  as  between  the  taxa- 
tion of  the  various  forms  of  wealth  should  extend  to 
the  present  extreme.  Whenever  the  people  in  general 
have  been  made  acquainted  with  the  facts  there  has 
resulted  a  strong  movement  for  the  readjustment  of 
the  tax  burden. 

The  reason  why  the  policy  of  favoring  manufac- 
tures has  been  so  generally  accepted  by  the  American 
states  is  not  difficult  to  learn.  Business  interests  in 
any  community  are  benefitted  by  the  development  of 
manufactures.  The  construction  of  new  plants,  with 
the  attendant  increase  in  the  laborers  employed  in 
those  plants,  adds  to  the  profits  of  the  merchants  of 
the  community.  As  a  large  number  of  the  influential 
citizens  in  any  community  that  control  the  policy  of 
the  community  are  interested  financially  in  real  estate 
and  mercantile  business,  they  have  naturally  been  very 
eager  to  offer  privileges  that  would  attract  the 
investment  of  capital. 

So  each  community  feels,  therefore,  that  its  pros- 
perity depends  upon  the  prosperity  of  its  manufactur- 
ing plants.  This  refers  to  the  community  as  a  separate 
entity.  But  when  all  the  communities  of  the  State  are 
grouped  together  does  not  their  prosperity  depend 
upon  the  prosperity  of  all  the  industries  of  the  State? 
If  there  are  inequalities  in  the  tax  burden  as  between 
the  different  industries,  and  the  agricultural  industry 
is  subject  to  more  than  its  share  of  the  tax  burden,  are 


Taxing  Manufacturing  Companies  129 

not  those  communities  affected  adversely?  Or  is  it 
not  just  as  important  to  the  communities  of  the  State 
that  the  agricultural  and  other  industries  should  be 
prosperous  as  well  as  that  the  manufacturing  industry 
should  be  prosperous. 

At  the  State  tax  association's  first  conference  held 
at  Utica  in  1911  John  D.  Kernan  of  Utica  voiced  these 
sentiments  in  his  paper,  *'  Taxation  of  manufacturing 
corporations  in  New  York  State,"  when  he  said,  "  Ten 
thousand  more  people  employed  in  manufacturing 
industries  in  Utica  would  add  fifty  thousand  to  the 
population;  to  provide  them  with  homes,  stores,  sup- 
plies and  necessaries  and  recreation  would  so  expand 
city  real  estate  growth  and  values  as  to  more  widely 
distribute  and  thereby  greatly  lighten  the  burden  of 
real  estate  taxes.  Every  farmer  in  Oneida  County 
would  benefit  by  raising  and  selling  more  produce  to 
meet  a  larger  demand  and  land  would  be  consequently 
in  greater  demand  and  of  more  value,  as  in  Oneida 
County  so  would  it  be  thruout  the  State. ' ' 

If  every  community  was  to  act  on  this  principle  that 
they  existed  only  to  induce  manufacturing  industries  to 
locate  in  their  midst,  where  would  the  system  end  and 
what  would  become  of  the  surplus  of  manufactured 
goods  made? 

Heretofore  manufacturing  corporations  have  been 
assessed  locally  on  their  personal  property  under 
Section  12  of  the  tax  law,  which  has  been  unamended 
since  1857.  Now  they  are  exempt  from  this  local  per- 
sonal assessment.  How  inadequately  they  were 
assessed  for  personal  property  was  pointed  out  by  the 
1915  joint  legislative  committee  on  taxation  which 
made  quite  a  thoro  investigation  concerning  the  assess- 
ment of  maimfacturing  companies  in  this  State.  A 
list  of  twenty-four  manufacturing  companies  whose 
taxable  personalty  amounted  to  $90,522,733  were 
shown  to  be  assessed  $3,339,800.  Many  other  manu- 
5 


130  Taxation  in  New  York 

facturing  companies  were  shown  to  be  very  much 
underassessed. 

Will  the  manufacturing  industry  go  elsewhere  since 
New  York  State  has  imposed  a  State  tax  upon  manu- 
facturing corporations?  According  to  the  1914  United 
States  census  bulletin  on  manufactures  the  taxes  paid 
by  manufactures  in  New  York  State  was  $56,218,108. 
This  includes  taxes  of  all  kinds,  both  federal  and  state. 
Two  industries  are  very  highly  taxed  by  the  federal 
government,  that  is  the  tobacco  and  liquor  industries. 
New  York  ranks  first  in  the  tobacco  and  malt  liquor 
industries.  The  taxes  paid  by  these  two  industries 
amounted  to  $30,159,751.  Eliminating  these  two  indus- 
tries and  the  manufacturing  industries  of  New  York 
State  paid  seven-tenths  of  one  per  cent  of  their  capital 
investment  in  taxes.  Twenty-two  other  states  of  the 
Union  with  the  tobacco  and  malt  liquor  industries 
eliminated  paid  a  higher  percentage  of  their  capital 
investment  in  taxes  as  follows:  Kentucky,  five  and 
one-half  per  cent. ;  Indiana,  four  and  one-tenth  per 
cent. ;  Louisiana,  three  and  one-fifth  per  cent. ;  Illinois, 
two  and  one-half  per  cent. ;  Maryland  and  Nebraska, 
two  and  two-fifths  per  cent. ;  Mississippi,  one  and  two- 
fifths  per  cent. ;  West  Virginia,  one  and  three-tenths 
per  cent.;  Tennessee,  one  and  one-fifth  per  cent.; 
Massachusetts  and  Nevada,  one  and  one-tenth  per 
cent.;  Arizona,  New  Hampshire,  Ohio  and  Wisconsin, 
one  per  cent.;  Montana,  Virginia  and  Washington, 
nine-tenths  of  one  per  cent. ;  and  Florida,  Idaho,  Kan- 
sas and  Oklahoma,  eight-tenths  of  one  per  cent.  This 
shows  that  many  other  states  are  not  as  lenient  in  their 
taxation  of  manufactures  as  is  New  York.  So  if  manu- 
facturing industries  are  to  leave  this  State,  where  will 
they  go  1 

The  total  capital  investment  in  manufactures  in 
New  York  State  in  1914  was  $3,334,277,526,  while  the 
total  w^ealth  of  the  State  in  1912  was  $25,011,105,223. 
The  capital  investment  in  manufactures  was  thirteen 
per  cent,  of  the  total  wealth.    In  1917  the  total  revenue 


Taxing  Manufacturing  Companies  131 

receipts  of  the  State  were  $390,336,374,  and  of  this 
amount  the  manufactures  paid  $17,823,582,  or  four 
per  cent.  So  that  while  the  manufacturing  industry 
possesses  thirteen  per  cent,  of  the  total  wealth  of  the 
State,  it  pays  in  taxes  for  the  support  of  the  State  and 
local  government  only  four  per  cent,  of  the  total 
revenue  receipts.  Assuming  that  the  ability  of  the 
various  classes  of  wealth  to  pay  taxes  is  roughly  meas- 
ured by  their  capital  investment,  the  manufacturing 
industry  should  pay  thirteen  per  cent,  of  the  total 
revenue  receipts. 

The  folly  of  an  artificial  stimulus  to  any  industry  is 
well  illustrated  by  the  results  of  bounty  fed  sugar  in 
Europe.  At  the  beginning  of  the  nineteenth  century, 
the  West  Indies  provided  England  with  ninety-one  per 
cent,  of  her  total  sugar  requirements.  The^  Germany 
with  its  beet  sugar  began  to  compete  with  cane  grow- 
ing countries  and  by  means  of  direct  and  differential 
subsidies  practically  ousted  producers  of  cane  from 
British  markets.  At  the  close  of  the  nineteenth  cen- 
tury Germany  was  providing  Great  Britain  with  three- 
fourths  of  its  total  sugar  supply  and  the  West  Indies 
was  contributing  less  than  one-tenth.  In  1899  Joseph 
Chamberlain  emphasized  the  need  of  saving  the  West 
Indian  cane  industry  from  extinction.  The  bounty 
system  on  beet  sugar  as  practised  by  Germany  was 
imitated  by  Russia,  Austria,  France  and  Holland. 

By  paying  an  export  bounty  on  beet  sugar  German 
sugar  was  selling  cheaper  in  England  than  it  was  at 
home.  The  purpose  was  to  destroy  the  cane  sugar 
industry  Avhich  had  no  such  artificial  stimulus  to  keep 
it  alive.  Now  that  the  recent  world  war  has  taken  away 
the  artificial  stimulus  to  the  beet  sugar  industry,  the 
cane  sugar  industry  has  revived  and  is  again  supplying 
England  with  its  sugar.  What  must  be  the  feelings  of 
the  German  people  to  think  that  after  taxing  them- 
selves for  so  many  years  to  develop  the  beet  sugar 
Industry  of  their  country  to  realize  that  this  artificial 
stimulus  cannot  put  any  industry  on  a  firm  basis? 


CHAPTER  X 
THE  CONDITION   OF   NEW  YORK  CITY 

In  1917  New  York  City's  budget  was  $211,114,136, 
of  which  amount  $176,842,500  was  raised  by  direct  tax 
on  property.  The  property  on  which  this  tax  was 
raised  consisted  of  $8,254,549,000  real  estate  and  $419,- 
156,315  personal  property,  so  that  real  estate  had  to 
pay  ninety- five  per  cent,  of  the  tax. 

In  1899  the  date  of  the  formation  of  Greater  New 
York,  its  budget  was  $95,209,959,  so  that  there  has 
been  an  increase  in  eighteen  years  of  one  hundred  and 
twenty-one  per  cent.  If  New  York  City's  budget  in 
the  next  eighteen  years  continues  to  increase  at  the 
same  rate  of  one  hundred  and  twenty-one  per  cent., 
then  in  1935  it  will  amount  to  $466,562,242. 

As  New  York  City's  real  estate  is  already  overbur- 
dened in  paying  ninety-five  per  cent,  of  the  tax  of  the 
present  budget,  what  is  going  to  happen  when  it  mU 
be  called  to  pay  practically  all  of  a  budget  of 
$466,562,242? 

As  a  part  of  the  Dutch  colony  of  New  Netherland 
the  city's  revenues  nearly  all  came  from  customs  and 
excises.  The  Federal  government  took  away  the  city's 
revenues  from  customs.  Mayor  Fernando  Wood  in  a 
message  to  the  Common  Council  on  January  7,  1861, 
said:  ''Why  should  not  New  York  City  instead  of 
supporting  by  her  contributions  in  revenue  two-thirds 
of  the  expenses  of  the  United  States,  become,  also, 
equally  independent?  As  a  free  city,  with  a  nominal 
duty  on  imports,  her  local  government  could  be  sup- 
ported without  taxation  upon  her  people.  .  .  .  Thus 
we  could  live  free  from  taxes,  and  have  cheap  goods 
nearly  duty  free." 

When  New  York  City  collected  its  own  excises  prior 
to  the  passage  of  the  State  excise  law  of  1896  it  col- 
lected $1,758,548  the  last  year  the  old  law  was  in 

[132] 


The  Condition  of  New  York  City  133 

operation.  The  first  year  the  new  law  was  in  operation 
there  was  collected  from  excises  in  New  York  City  the 
sum  of  $7,317,026  of  which  the  city  received  $4,878,- 
017,  so  that  the  municipality  received  over  twice  as 
much  when  the  State  collected  the  excises  as  it  did 
when  the  collection  was  left  to  each  locality.  But  New 
York  City  was  not  overloaded  with  such  a  tremendous 
budget  twenty-two  years  ago  as  it  is  to-day. 

In  1918  New  York  City's  bonded  indebtedness  was 
$1,469,448,477.  In  1886  Governor  David  Bennett 
Hill  sent  a  special  message  to  the  Legislature  calling 
attention  to  the  fact  that  New  York  City  had  exceeded 
its  constitutional  debt  limit  by  over  six  million  dollars. 
In  this  special  message  Governor  Hill  commented  on 
the  ncAv  constitutional  amendment  limiting  the  bonded 
indebtedness  of  a  municipality  to  ten  per  cent,  of  the 
assessed  valuation  of  real  estate  in  these  words :  *'  That 
the  evil  sought  to  be  guarded  against  by  it  was  the 
imposition  upon  future  generations  of  taxpayers  of 
the  payment  for  the  expenditures  of  to-day."  Since 
then  water  bonds  issued  since  Januarv  ],  1904,  and 
revenue  producing  bonds  for  docks  and  rapid  transit 
have  been  exempted  from  the  constitutional  provision 
requiring  that  the  bonded  indebtedness  of  a  municipal- 
ity shall  not  exceed  ten  per  cent,  of  the  assessed  valua- 
tion of  real  estate.  On  January  1,  1918,  City  Controller 
Charles  L.  Craig  reported  the  constitutional  debt  incur- 
ring power  of  the  City  of  New  York  within  the  debt 
limit  to  be  $50,270,1 55.  That  is  the  city  could  still 
borrow  fifty  million  dollars  before  it  exceeded  the 
constitutional  d('l)t  limit  of  ten  per  cent,  of  the  assessed 
valuation  of  real  estate.  Still  there  is  considerable 
dispute  as  to  the  margin  of  New  York  City's  debt 
incurring  capacity  and  there  are  many  who  contend 
that  the  nnmioipality  has  already  exeeeded  the  con- 
stitutional limit. 

However  this  vast  indebtedness  will  have  to  be  paid 
sometime  and  it  will  have  to  be  paid  by  the  real  estate 
owners  of  Greater  'New  York.    Unless  the  city  secures 


134  Taxation  in  New  York 

new  sources  of  revenue  it  will  be  forced  in  a  few  years 
to  call  upon  the  State  for  assistance.  The  attempt  to 
secure  legislation  in  1918  limiting  the  tax  rate  upon 
real  estate  to  seventeen  and  one-half  mills  strikingly 
illustrates  the  plight  of  real  estate  owners  in  the 
metropolis.  Statistics  presented  to  the  joint  legislative 
committee  appointed  in  1915  for  the  investigation  of 
the  finances  of  the  City  of  New  York  showed  that  in 
1915  the  bonded  indebtedness  of  Boston  was  eighty- 
four  million  dollars,  of  Philadelphia  one  hundred  mil- 
lion dollars,  of  Chicago  twenty-six  million  dollars,  of 
Saint  Louis  twenty-two  million  dollars,  and  of  Balti- 
more sixty  million  dollars.  The  bonded  indebtedness 
of  New  York  City  is  over  four  times  the  combined 
indebtedness  of  these  five  cities,  altho  its  population  is 
much  less  than  their  combined  population. 

In  New  York  City's  1917  budget  the  largest  item  was 
for  debt  service,  amounting  to  $69,744,568,  or  thirty- 
three  per  cent,  of  the  total  budget.  The  next  largest 
item  was  for  education,  $44,210,209.  Protection  of 
life  and  property  in  which  is  included  police  and  fire 
departments,  come  third  with  $32,304,063.  Health 
and  sanitation  come  fourth  with  $17,405,290.  While 
it  is  easier  to  get  into  debt  than  it  is  to  get  out  of  it,  it 
is  unfortunate  that  such  a  large  percentage  of  the  tax- 
payers '  money  must  go  to  pay  off  old  debts.  The  inter- 
est alone  on  the  city's  debt  amounted  to  $43,284,252. 
If  the  city  had  followed  the  pay  as  you  go  plan 
such  an  immense  debt  would  not  have  accumulated. 
No  generation  will  ever  build  anything  it  does  not 
want  for  its  immediate  use.  The  contention  that 
future  generations  should  pay  for  any  benefits  they 
receive  is  questionable  for  the  reason  that  they  had  no 
voice  in  the  matter  and  if  they  had  had  the  privilege 
of  choosing  they  might  have  chosen  something  alto- 
gether different.  It  is  an  easy  way  of  shifting  off  on 
to  the  future  something  present  generations  should 
pay  for  themselves. 


The  Condition  of  New  York  City  135 

It  is  characteristic  of  the  American  people  that  they 
are  so  willing  to  let  posterity  or  future  generations 
help  pay  our  debts,  but  they  are  not  so  willing  to  con- 
serve our  natural  resources  for  posterity  or  future 
generations.  The  soil  of  the  East  was  once  virgin  soil, 
rich  in  fertility  and  productive  of  immense  crops,  but 
the  American  farmer  kept  taking  off  and  putting  prac- 
tically nothing  back  until  he  had  robbed  the  soil  of  all 
its  fertility  and  then  he  emigrated  to  the  West  to 
repeat  the  same  procedure  upon  the  rich,  fertile  lands 
of  the  prairies.  Our  lumber  forests  were  once  said  to 
be  inexhaustible,  but  the  American  lumberman  has 
nearly  exhausted  them  now.  These  illustrations 
could  be  multiplied  over  and  over  again.  When  the 
suggestion  is  made  that  something  ought  to  be  saved 
for  posterity,  the  answer  is  glibly  made  "  let  poster- 
ity take  care  of  itself."  Yet  these  same  people  \Wth 
their  glib  answer  shove  off  on  to  posterity  all  of 
their  debts  which  they  possibly  can.  Anyone  can  see 
how  unfair  and  unjust  the  whole  thing  is. 

The  city  has  spent  a  great  deal  of  money  on  its 
docks.  Its  bonded  debt  for  docks  amounted  to  $104,- 
977,141  on  December  31,  1917.  In  1917  after  deducting 
the  cost  of  maintenance  the  city  received  in  revenue 
from  its  waterfront  property  for  dock  and  slip  rent 
and  wharfage  the  sum  of  $5,477,275.  This  is  hardly 
enough  to  pay  interest  charges  on  the  bonded  debt  for 
dock  purposes. 

The  first  city  wharf  was  established  in  1658.  This 
dock  appears  to  have  adjoined  the  great  bridge  across 
the  Heere  Gracht  or  Grand  Canal.  The  Dutch  West 
India  Company  allowed  the  city  magistrates  to  collect 
eight  stivers  per  last  (about  two  tons)  for  loading  or 
unloading  from  this  wharf  or  dock.  In  1870  the  city 
department  of  docks  and  ferries  was  organized  and 
since  then  the  city  has  instituted  a  progressive  policy 
for  the  development  of  its  docks  and  ferries.  During 
the  last  decade  over  ninety-five  acres  have  been 
reclaimed  on  the  Hudson  River  and  a  bulkhead  wall 


136  Taxation  in  New  York 

twelve  miles  long  has  been  constructed  together  with  a 
marginal  street  one  hundred  and  eighty  feet  in  width. 
By  thus  improving  the  dockage  facilities  afforded  com- 
merce is  attracted  to  the  port  and  this  contributes  in 
no  small  degree  to  the  growth  and  development  of  the 
metropolis. 

For  the  fiscal  year  ending  June  30,  1917,  fifty  and 
thirty-two  hundredths  per  cent,  of  the  imports  into  the 
United  States  entered  thru  the  port  of  New  York. 
This  is  a  gradual  decrease  year  by  year  since  1900  when 
sixty-three  and  twenty-one  hundredths  per  cent,  of  the 
imports  into  the  United  States  entered  thru  the  port 
of  New  York.  The  greatest  gains  during  this  period 
of  time  have  been  with  the  Pacific  Coast  ports  where 
imports  have  increased  from  six  and  ninety-three  hun- 
dredths per  cent,  in  1900  to  thirteen  and  forty-nine 
hundredths  per  cent,  in  1917. 

Exports  thru  the  port  of  New  York  have  increased 
from  thirty-seven  and  twenty  one  hundredths  per  cent, 
in  1900  to  fifty-three  and  eighty-two  hundredths  per 
cent,  in  1916,  when  they  decreased  to  forty-eight  and 
fifty-six  hundredths  per  cent,  in  1917.  There  was 
a  decrease  of  ninety-two  million  dollars  in  the  value 
of  imports  entering  the  port  of  New  York  for  1918 
as  compared  with  1917  and  a  decrease  of  four  hundred 
and  thirty-one  million  dollars  in  the  value  of  exports 
leaving  the  port  of  New  York  for  1918  as  compared 
with  1917.  These  figures  would  indicate  that  the 
Pacific  Coast  ports  are  becoming  the  favorite  route 
for  merchandise  bound  to  or  departing  from  the 
United  Staters.  Probably  the  recent  world  war  has 
something  to  do  with  New  York  City's  loss  of  com- 
merce. If  New  York  is  to  continue  its  commercial 
supremacy  it  will  need  to  supply  the  best  of  dockage 
facilities. 

There  is  a  constant  demand  by  steamship  companies 
for  piers.  The  inability  of  the  city  to  supply  them  is 
a  loss  in  commerce  to  the  city.  The  various  railroads 
occupy  fifty-three  city  owned  piers  in  New  York  and 


The  Condition  of  New  York  City  137 

also  occupy  fifty-two  privately  owned  piers.  This 
inappropriate  use  of  the  waterfront  by  the  railroads 
constantly  interferes  with  a  proper  development  of  the 
port  of  New  York.  The  occupation  of  so  much  of  the 
Manliattan  waterfront  by  the  railroads  tends  to 
increase  the  rental  value  of  every  foot.  This  competi- 
tion for  the  waterfront  makes  high  charges  for  Manhat- 
tan docks  and  piers.  These  charges  are  a  burden  on 
shipping  and  makes  it  costly  for  steamship  companies 
to  do  business  at  the  port  of  New  York.  In  time  this 
will  produce  results  detrimental  to  the  port  and  drive 
away  from  New  York  City  much  of  the  ocean  borne 
traffic. 

As  a  solution  there  should  be  a  terminal  railroad 
connecting  and  co-ordinating  all  the  railroads  which 
enter  the  port  of  New  York  and  reaching  all  the  com- 
mercial and  industrial  sections.  The  piers  should  be 
reconstructed  so  that  cars  can  be  run  on  them.  They 
should  also  be  constructed  of  ample  capacity  to  store 
full  ship  cargoes  even  if  it  should  become  necessary  to 
build  warehouses  over  them.  There  is  a  congestion  of 
freight  on  the  piers  at  present.  Cold  storage  should 
be  provided  on  the  piers  to  preserve  the  food  products, 
large  quantities  of  which  go  to  waste  for  want  of 
prompt  delivery.  At  present  merchants  in  the  metrop- 
olis buy  goods  from  manufacturers,  have  them  sent  to 
New  York  City  and  cart  them  to  their  Avarehouses,  only 
to  cart  them  back  again  after  they  are  sold,  perhaps  to 
the  same  station  on  the  piers  at  which  they  receive 
them.  Some  plan  should  be  devised  whereby  a  mer- 
chant could  store  his  goods  in  a  warehouse  at  any  sta- 
tion on  the  piers  until  they  are  sold  and  then  ship  them 
over  any  railroad  without  any  trucking. 

William  J.  Wilgus,  engineer  of  the  Ncav  York  Cen- 
tral Lines,  testified  before  a  commission  inv(»stigating 
New  York's  West  Side  situation  that  eighty  per  cent, 
of  the  railroad  freiglit  is  trucked  thru  the  streets  of 
New  York  Citv.    Over  tAventv  million  dollars  animallv 


138  Taxation  in  New  York 

is  spent  in  trucking  freight  in  the  metropolis.  Many 
of  the  railroad  freight  stations  are  located  along  the 
west  shore  of  Manhattan.  While  this  is  the  most  con- 
venient to  the  railroads,  it  is  the  least  convenient  and 
the  most  costly  to  a  large  percentage  of  the  shippers 
and  consignees  of  freight. 

A  terminal  railroad  should  extend  south  along  the 
west  side  of  Manhattan  to  Cortlandt  Street,  then  to  the 
East  River  and  along  the  East  Eiver  north  to  155th 
Street.  Freight  tunnels  should  connect  this  terminal 
railroad  with  New  Jersey,  Brooklyn  and  Queens.  The 
reconstruction  of  the  city  piers  and  the  building  of  a 
freight  terminal  railroad  will  be  a  costly  enterprise  and 
if  the  city  cannot  finance  such  an  undertaking  owing 
to  the  constitutional  debt  limit  then  the  State  should 
do  it;  for  the  prosperity  of  the  Empire  State  is  inti- 
mately interwoven  with  the  prosperity  of  the  City  of 
New  York. 

At  present  half  of  the  imports  and  nearly  half  of  the 
exports  of  the  United  States  pass  thru  the  port  of  New 
York. 

New  York  City^s  bonded  debt  December  31, 1917,  for 
ferry  purposes,  acquisition  of  land,  construction  of 
boats  and  terminals  was  $17,986,452.  The  municipal 
ferries  are  losing  propositions.  The  Long  Island  ferry 
to  Brooklyn  was  in  colonial  days  one  of  the  chief 
sources  of  municipal  revenue.  In  1699  it  Avas  let  for 
seven  years  to  Rip  Van  Dam  at  £165  per  annum,  he 
being  the  highest  bidder.  The  rates  of  ferriage  estab- 
lished at  this  time  were  as  follows : 

Single  persons,  eight  stivers  in  wampum  or  a  silver 
two  pence. 

Persons  in  company,  half  price. 

After  sunset,  double  ferriage. 

Cattle,  single,  one  shilling. 

Cattle,  in  company,  nine  pence,  &c. 

Soon  after  this  Brooklyn  made  pretensions  to  some 
right  of  ferriage  and  applied  to  the  Governor,  the  Earl 


The  Condition  of  New  York  City  139 

of  Bellomont,  for  a  ferry  grant;  but  the  City  of  New 
York  filed  a  remonstrance  stating  that  for  over  seventy 
years  New  York  had  enjoyed  the  right  of  the  ferry.  In 
consequence  of  this  remonstrance  Brooklyn  failed  to 
obtain  a  ferry  grant. 

The  city's  bondet  debt  December  31,  1917,  for  water 
supply  amounted  to  $223,142,572.  It  is  interesting  to 
trace  the  development  of  New  York's  water  supply. 
Before  1652  when  there  were  no  public  wells,  the  inhab- 
itants of  New  Amsterdam  were  supplied  by  private 
wells  within  their  own  inclosures,  but  it  was  generally 
the  custom  for  several  neighboring  families  to  join  in 
the  expense  of  constructing  a  well  which  was  used  in 
common  by  them  all.  It  was  not  until  1750  that  pumps 
came  into  use.  Then  public  wells  and  pumps  were 
constructed  wliich  were  usually  located  in  the  middle 
of  streets.  But  the  water  most  esteemed  was  that  from 
what  was  called  the  Tea  Water  Pump,  which  was  in 
Orange,  near  Chatham  Street.  The  water  from  this 
pump  was  of  superior  quality,  and  was  taken  from  it 
into  hogsheads  on  carts,  and  from  them  delivered  to 
the  inhabitants  in  various  parts  of  the  city  for  a 
specific  price. 

In  1774  the  city  adopted  the  plan  proposed  by  Chris- 
topher Colles  and  commenced  the  construction  of  a 
reservoir  and  other  works  on  the  east  line  of  Broadway 
between  Pearl  and  White  Streets  for  the  purpose  of 
supplying  the  city  with  water.  This  was  completed  in 
1775,  but  in  consequence  of  the  Revolutionary  War  and 
the  occupation  of  the  city  by  the  British,  the  water- 
works were  abandoned.  In  April  1799  the  Manhattan 
Company  was  incorporated  by  the  Legislature  to  sup- 
ply New  York  City  with  pure  and  wholesome  water. 
This  company  sunk  a  large  well  at  the  comer  of  Duane 
and  Cross  Streets.  Aftemvards  this  company  con- 
structed a  reservoir  in  Chambers  Street  and  by  means 
of  bored  wooden  logs  laid  underground  distributed 
water  thruout  the  city.    Its  service  was  never  satis- 


140  Taxation  in  New  York 

factor}^  and  from  time  to  time  there  was  much  agitation 
for  a  municipal  water  system.  But  it  was  not  until 
after  there  had  been  a  severe  epidemic  of  cholera  in 
New  York  City  in  1834  that  action  was  finally  taken. 

How  deplorable  the  condition  was  in  New  York  is 
evidenced  by  the  following  taken  from  the  report  filed 
February  16,  1835,  by  the  commissioners  who  were 
appointed  relative  to  the  supplying  the  City  of  New 
York  with  pure  and  wholesome  water : 

"  That  the  most  of  the  water  from  our  wells  and 
pumps  receives  the  drainage  of  numerous  sinks  and 
cesspools,  which  filtrate  thru  the  earth  and  poison 
the  springs  causing  the  water  to  be  brackish,  must  be 
admitted ;  and  that  it  contains  much  earth  and  foreign 
matter  held  in  solution  is  proved  by  the  analysis  of 
George  Chilton,  chemist,  who  showed  that  a  gallon  of 
water  from  the  well  of  the  Manhattan  Company  in 
Reed  Street  yielded  125  grains  of  solid  matter  and 
the  same  quantity  of  water  from  their  well  in  Bleecker 
Street  yielded  20  grains.  The  constant  use  of  this  fluid, 
therefore,  must  be  more  or  less  injurious  to  health,  and 
is  as  likely  to  have  been  one  of  the  causes  of  cholera  in 
New  York  last  year.  Why  is  it  that  the  City  of  Phila- 
delphia experienced  so  little  of  this  disease  while  it 
raged  with  so  much  violence  with  us?  The  only  way 
we  can  account  for  this  difference  in  the  health  of  the 
tw^o  cities  is,  that  Philadelphia  is  supplied  with  abund- 
ance of  pure  and  wholesome  water,  not  only  for 
drinking  and  culinary  purposes,  but  for  bathing  and 
for  washing  the  streets  of  the  whole  city,  while  New 
York  is  entirely  destitute  of  the  means  for  effecting 
any  of  these  purposes.  .  .  .  No  disagreeablei  odor 
assails  the  persons  who  pass  thru  the  streets  of  Phila- 
delphia; everything  calculated  to  annoy  the  senses  is 
swept  away  by  the  running  stream ;  but  in  New  York  a 
person  coming  in  the  city  from  the  pure  air  of  the 
country  is  compelled  to  hold  his  breath,  or  make  use 
of  some  perfume  to  break  off  the  disagreeable  smell 
arising  from  the  streets." 


The  Condition  of  New  York  City  141 

After  showing  that  the  average  rate  for  water 
charged  by  the  Manhattan  Company  in  New  York 
City  was  $9.63  per  family  per  annum,  while  in  Phila- 
delphia where  the  mnuicipality  owned  the  waterworks 
the  average  rate  charged  for  water  w^as  $6  per  family 
per  annum;  this  commission  recommended  that  the 
city  install  a  municipal  waterworks,  obtaining  a  supply 
of  water  from  Garretson's  Mill  on  the  Croton  River. 
In  April  1835  the  people  of  New  York  City  by  a  vote 
of  17,330  to  5,963  decided  to  construct  an  aqueduct 
from  Garretson's  Mill  on  the  Croton  River  to  supply 
the  city  \\ith  water  and  on  the  Fourth  of  July  1842 
water  from  the  Croton  River  was  introduced  into  the 
distributing  reservoir  on  Murray  Hill.  The  work  w^as 
not  finallv  completed  until  1849  when  it  had  cost  the 
city  $11,729,228. 

Within  a  generation  the  original  Croton  works  were 
outgrown.  Additional  impounding  reservoirs  were  con- 
structed upon  branches  of  the  Croton  River  from  time 
to  time.  A  new  Croton  aqueduct  was  constructed  in 
1890.  Brooklyn  did  not  develop  a  public  water  supply 
system  until  1859.  The  sources  of  supply  were 
obtained  principally  by  means  of  groups  of  wells  and 
pumping  stations  and  afterwards  supplemented  by  two 
large  infiltration  galleries.  In  Queens  and  Riclmiond 
private  water  companies  supplied  these  two  boros  with 
water. 

After  tlu'  consolidation  of  New  York  and  Brooklyn 
in  1898  the  need  of  more  water  became  apparent  and 
in  1899  the  Ramaf)o  Water  Comjiany  made  a  ]iro])o- 
sition  for  supplying  Greater  New  York  witli  water. 
This  company  proposed  to  obt<ain  water  from  the 
Ramapo  River  and  the  Catskill  ^Mountains.  New  York 
had  already  had  one  experience  of  obtaining  its  water 
from  a  private  company  and  had  no  inclination  to  go 
back  to  its  troubles  of  the  days  of  the  Manhattan  Com- 
pany. By  a  vote  of  the  people  on  November  8,  1904, 
the  State  constitution  was  amended  removing  capital 


142  Taxation  in  New  York 

expenditures  for  waterworks  from  the  municipal  debt 
limit.  Then  in  1905  the  Legislature  granted  the  City 
of  New  York  permission  to  acquire  lands  for  the 
construction  of  reservoirs,  dams,  aqueducts,  filters,  etc. 
for  an  additional  supply  of  pure  and  wholesome  water. 
It  was  decided  to  obtain  water  from  the  Catskill 
Mountains  and  work  was  commenced  February  23, 
1907.  'The  first  delivery  of  Catskill  water  into  dis- 
tribution pipes  of  Greater  New  York  occurred 
December  27,  1915.  Up  to  October  1917  the  sum  of 
one  hundred  thirty-nine  million  dollars  had  been 
expended  on  the  Catskill  system.  In  October  1917 
New  York  City  was  using  615  million  gallons  of  water 
daily.  As  the  city  continues  to  grow  its  water  supply 
problems  will  recur  for  solution  from  time  to  time. 

In  1917  New  York  City  paid  $2,976,698  for  lighting 
its  streets.  No  attempt  was  made  to  light  the  streets 
by  public  authority  until  the  year  1762  when  posts  and 
lamps  were  purchased.  Before  that  time  the  occupants 
of  every  tenth  house  were  required  to  hang  out  a  lan- 
tern upon  a  pole.  In  1770  J.  Stoutenburg  was  paid 
$760  for  supplying  oil  and  lighting  the  city  lamps. 
In  1823  the  city  contracted  with  the  New  York  Gas 
Light  Company  to  light  certain  parts  of  the  city 
with  gas. 

The  city's  bonded  debt  for  bridges  on  December  31, 
1917,  was  $111,230,066.  The  city  is  the  owner  of  forty- 
five  bridges.  There-  are  nine  bridges  over  the  Harlem 
River,  the  first  one  wais  built  by  Frederick  Phillipse 
in  1693  and  was  named  ' '  Kings'  Bridge. ' '  This  bridge 
was  of  much  importance  during  the  Revolutionary 
War.  Over  it  Washington's  defeated  and  disheartened 
army  retreated  in  September  1776  and  over  it  again 
Washington 's  army  crossed  in  November  1783  to  take 
possession  of  New  York  City  upon  its  evacuation  by 
the  British. 

There  are  four  bridges  over  the  East  River,  three 
suspension  bridges  and  one  cantilever  bridge.     This 


The  Condition  of  New  York  City  143 

cantilever  bridge,  the  Queensboro  Bridge,  is  the  second 
longest  bridge  in  the  world,  its  total  leng-th  being  7,449 
feet.  Construction  on  the  Brooklyn  Bridge  was  com- 
menced January  3,  1870,  and  the  bridge  was  opened 
for  traffic  May  24,  1883.  Its  cost  including  land  and 
construction  was  over  twenty-four  million  dollars. 

The  city's  bonded  debt  for  parks  on  December  31, 
1917,  was  $55,906,355.  New  York  has  over  eight 
thousand  acres  of  land  in  parks  and  these  parks  are 
valued  at  over  eight  hundred  million  dollars.  Public 
opinion  is  awakened  to  a  sense  of  the  importance  of 
open  spaces  for  air  and  exercise  as  a  necessary  sanitary 
provision  for  the  inhabitants  of  all  large  tow^ns  and  the 
extension  of  rational  enjoyment  is  now  regarded  as  a 
great  preventive  of  crime  and  vice. 

The  first  park  space  in  the  City  of  New  York  was 
that  now  called  Bowling  Green  Park.  In  1732  this  plot 
of  ground  was  leased  by  citizens  for  plajdng  the  game 
of  bowls.  In  1786  Bowling  Green  was  first  laid  out  as 
a  park.  At  that  time  it  was  the  center  of  the  fashiona- 
ble residential  district.  A  defensive  line  of  works  with 
cannon  mounted  behind  them  and  known  as  "  The 
Battery  "  was  in  the  early  days  built  along  the  edge 
of  water  facing  a  ledge  of  rocks  stretched  across  the 
southern  part  of  Manhattan.  About  1723  steps  were 
taken  to  fill  in  to  the  present  water  line,  but  many 
years  passed  before  this  was  actually  accomplished. 
This  became  Battery  Park  which  the  State  ceded  to 
the  City  of  New  York  in  1789.  Where  the  present  City 
Hall  Park  is  now  located  was  in  the  latter  half  of  the 
seventeenth  century  knowm  as  "  The  Common  Lands," 
and  it  was  used  for  the  grazing  of  cattle.  What  was 
laid  out  as  a  Potter's  Field  in  1794  has  become  Madison 
Square  Park. 

Eighteen  thousand  persons  signed  a  jDetition  to  the 
Legislature  asking  for  a  central  park  in  New  York  City 
and  in  July  1853  the  Legislature  authorized  the  laying 
out  of  what  is  now  Central  Park.    Over  seven  thousand 


144  Taxation  in  New  York 

city  lots  were  taken  for  this  park  and  the  owners  were 
awarded  compensation  to  the  amount  of  a  little  over 
five  million  dollars.  Central  Park  has  an  area  of  843 
acres  and  is  located  in  the  heart  of  Manhattan  Island. 
Prospect  Park,  Brooklyn,  was  authorized  by  the  Legis- 
lature in  April,  1860.  There  are  historical  associations 
connected  with  this  park,  as  in  it  was  the  scene  of  the 
fierce  battle  fought  August  27,  1776,  which  resulted  in 
the  capture  of  New  York  by  the  British. 

It  requires  eternal  vigilance  on  the  part  of  public 
spirited  citizens  to  preserve  the  city's  parks  as  breath- 
ing spots.  Again  and  again  there  are  attempts  made 
to  convert  them  to  other  uses.  In  the  seventies  there 
w^as  a  determined  plan,  then  alleged  to  be  a  necessity, 
to  turn  Battery  Park  over  to  the  elevated  railroads, 
to  be  covered  with  tracks  for  the  use  and  storage  of 
cars.  It  was  only  by  hard  and  persistent  work  that 
this  plan  was  defeated.  So  many  citizens  were  anxious 
for  rapid  transit  which  at  that  time  meant  elevated 
railroads  that  they  were  willing  to  sacrifice  Battery 
Park  for  the  attainment  of  this  need.  Yet  looking  back 
over  the  lapse  of  forty  years  it  is  very  fortunate  that 
Battery  Park  w^as  preserved  for  its  present  uses. 

The  city's  bonded  debt  December  31,  1917,  for  rapid 
transit  was  $199,450,888.  City  growth  demands  rapid 
and  certain  means  of  travel  between  different  sections 
and  the  general  center.  For  purposes  of  commerce  the 
people  of  a  great  business  center  are  far  more  effective 
when  they  have  the  means  to  go  to  and  fro  as  the 
occasion  demands,  with  the  least  possible  loss  of  time 
and  the  least  inconvenience  and  fatigue. 

Early  travel  was  largely  by  boat.  When  the  cow 
trails  about  the  island  became  more  passable  so  as  to 
be  designated  as  roads  there  was  considerable  travel 
on  horseback.  In  the  latter  part  of  the  eighteenth 
century  stages  and  omnibus  lines  served  the  popula- 
tion. The  first  horse  car  line  was  the  New  York  and 
Harlem   Railroad  which  was   opened   for   operation 


The  Condition  of  New  York  City  145 

November  26,  1832.  On  that  date  the  first  street  car 
in  the  world  slowly  crawled  up  Fourth  Avenue  from 
Prince  Street  to  Fourteenth  Street. 

As  the  lower  part  of  Manhattan  was  becoming  con- 
gested an  agitation  was  started  for  rapid  transit. 
Rapid  transit  meant  elevated  railroads  during  that 
period,  and  in  1870  a  small  section  of  an  elevated  rail- 
road was  erected  in  Greenwich  Street.  Surface  cable 
cars  were  introduced  in  1884,  but  they  soon  gave  way  to 
electric  street  cars.  Horse  cars  were  superseded  by 
electricity.  The  last  horse  car  in  New  York  City  made 
its  last  trip  on  July  26,  1917.  The  reason  why  horse 
cars  lingered  so  long  in  New  York  City  after  they  had 
disappeared  from  other  parts  of  the  country  was  that 
in  the  Boro  of  Manhattan  no  overhead  trolley  wires 
were  allowed.  The  cost  of  installing  underground 
troUey  wires  being  about  ten  times  the  cost  of  installing 
overhead  trolley  wires  the  traction  companies  were 
slow  in  replacing  their  horse  cars  with  electricity. 

The  rapid  growth  of  the  outlying  sections  and  the 
congestion  in  the  business  part  of  the  city  called  loudly 
for  a  better  system  of  rapid  transit.  The  first  subway 
was  opened  for  travel  October  27,  1904.  The  city  paid 
for  the  entire  cost  of  this  subway.  In  1913  the  city 
entered  into  contracts  with  the  Interborough  Rapid 
Transit  Company  and  the  Brooklyn  Rapid  Transit 
Company  to  build  a  number  of  subways.  The  principal 
features  of  these  contracts  were  as  follows :  The  Inter- 
borough Rapid  Transit  Company  was  to  contribute 
fifty-eight  million  dollars  towards  the  construction  of 
certain  subways  if  their  cost  amounted  to  one  hundred 
and  sixteen  million  dollars  and  the  city  to  contribute 
the  other  fifty-eight  million  dollars.  If  the  cost  of  con- 
struction exceeded  one  hundred  and  sixteen  million 
dollars  the  city  was  to  pay  the  balance.  The  Brooklyn 
Rapid  Transit  Company  was  to  contribute  thirteen 
million  five  hundred  thousand  dollars  towards  the  con- 
struction of  certain  subwavs  if  their  cost  amounted  to 


146  Taxation  in  New  York 

twenty-seven  million  dollars  and  the  city  to  contribute 
the  other  thirteen  million  five  hundred  thousand  dol- 
lars. If  the  cost  of  construction  exceeded  twenty- 
seven  million  dollars  the  city  was  to  pay  the  balance. 

When  completed  these  companies  are  to  operate  the 
subway  under  a  fifty  year  lease  and  the  companies  to 
receive  six  per  cent,  each  3'ear  on  their  investment  and 
also  one-half  of  the  net  earnings  if  there  are  any,  but 
if  there  are  any  deficits  from  operation  the  city  alone 
has  to  meet  it.  At  present  these  new  subways  are 
being  operated  at  a  loss.  At  the  time  these  contracts 
were  the  best  obtainable  and  on  account  of  the  con- 
gestion in  traffic  something  had  to  be  done  by  the  city ; 
but  the  dual  subway  system  should  be  made  self-sup- 
porting if  possible.  For  five  cents  one  can  ride  in  the 
dual  subway  from  Atlantic  Avenue  in  Brooklyn  under 
the  East  River  to  Manhattan  and  thru  Manhattan  to 
the  Bronx,  and  thru  the  Bronx  in  the  Broadway  branch 
to  242d  Street  or  Van  Cortlandt  Park,  a  distance  of 
nearly  seventeen  miles  in  an  hour's  time  without  the 
change  of  cars.  This  is  hardly  fair  to  the  taxpayers  of 
the  metropolis.  The  users  of  the  subways  should  pay 
enough  in  fares  to  provide  for  their  operation. 

In  time  the  elevated  railroad  structures  mil  all  be 
taken  down.  These  roads  upon  stilts  are  unsightly, 
full  of  dangers,  and  highly  inconvenient  to  those  who 
climb  up  to  stations  well  lifted  above  streets.  The 
dwellers  along  the  lines  of  the  elevated  railroads  are 
also  subject  to  much  discomfort.  Again  there  are 
many  objections  to  the  use  of  the  streets  by  surface 
street  railroads,  such  as  that  they  are  noisy  to  a  degree, 
that  they  greatly  inconvenience  ordinary  traffic,  and 
that  in  each  and  every  year  they  maim  and  kill  many 
victims. 

The  city's  bonded  debt  December  31, 1917,  for  schools 
and  sites  was  $121,331,056.  There  are  551  public 
schools  in  Greater  New  York  and  in  1917  they  had  an 
enrollment  of  895,522  students.    Sixty-five  per  cent,  of 


The  Condition  of  New  York  City  147 

the  children  between  the  ages  of  five  and  eighteen  are 
enrolled  in  the  city's  public  schools.  Still  there  is  a 
great  lack  of  sufficient  accommodations.  Practically 
all  of  the  city's  high  schools  are  double  session  schools. 
According  to  the  last  report  of  William  H.  Maxwell, 
city  superintendent  of  schools,  whenever  double  ses- 
sions are  introduced  in  a  school  the  school  began  to 
show  deterioration.  There  is  a  great  need  of  more 
public  school  buildings  in  New  York  City. 

The  city's  bonded  debt  December  31,  1917,  for 
libraries  and  sites  was  $12,202,767.  The  first  public 
library  in  New  York  City  was  known  as  the  corpora- 
tion library  and  was  opened  in  1729.  It  consisted  of 
1,642  books  presented  to  the  City  of  New  York  by  the 
English  Society  for  the  Propagation  of  the  Gospel  in 
Foreign  Parts.  This  was  the  same  society  which  es- 
tablished and  supported  English  schools  in  the  New 
York  colony. 

At  present  the  library  needs  of  Greater  New  York 
are  attended  to  by  three  separate  and  distinct  library 
corporations, —  the  New  York  Public  Library  in  the 
boros  of  Bronx,  Manhattan  and  Richmond;  the  Brook- 
l\m  Public  Library  in  Brooklyn ;  and  the  Queens  Boro 
Public  Library  in  Queens.  There  are  forty-six 
branches  attached  to  the  New  York  Public  Library, 
thirty-three  branches  to  the  Brooklyn  Public  Library 
and  twenty  branches  to  the  Queens  Boro  Public 
Library. 

The  city's  bonded  debt  December  31, 1917,  for  public 
buildings,  such  as  fire,  health,  courts,  police,  correc- 
tions, etc.,  was  $109,146,172.  As  a  Dutch  settlement  a 
fine  of  twenty-five  guilders  was  imposed  for  neglect  to 
sweep  a  chimney  in  case  it  caught  fire.  About  1658  fire 
ladders,  hooks  and  buckets  wore  ]iurcliased  and  the 
inhabitants  were  taxed  for  their  support  according  to 
the  number  of  their  fireplaces.  It  was  not  until  1737 
that  a  city  fire  department  was  organized  and  twenty- 
five  members  enrolled,  who,  in  consideration  of  their 


148  Taxation  in  New  York 

services,  were  excused  from  performing  military  duty 
or  from  serving  as  constables,  jurors,  or  surveyors  of 
highways.  At  present  there  are  4,400  members  of  the 
regular  fire  department  and  2,800  members  of  the 
volunteer  force.  The  volunteer  firemen  are  confined 
to  Queens  and  Richmond.  A  recent  number  of  the 
municipal  year  book  states  that  incendiarism  destroys 
annually  in  New  York  City  about  four  million  dollars 
worth  of  property.  One-fourth  of  the  fires  in  Greater 
New  York,  it  is  estimated,  are  due  to  arson.  Fire- 
making  has  been  developed  into  one  of  the  most  lucra- 
tive, and  least  risky,  occupations  pursued  by  certain 
classes  of  the  population. 

The  police  department  of  Greater  New  York  con- 
sists of  over  ten  thousand  policemen.  In  the  early 
days  there  was  a  watch  system  in  use  for  the  night  and 
the  employment  of  marshals  in  the  daytime.  In  1764 
a  whipping  post,  stocks,  cage  and  pillory  were  erected 
in  front  of  the  jail,  the  location  where  the  hall  of 
records  now  stands.  A  slave  market  was  erected  in 
1709  at  the  foot  of  Wall  Street,  where  all  negroes  who 
were  to  be  hired  or  sold,  stood  in  readiness  for  bidders. 

Greater  New  York  has  recently  acquired  an  expen- 
sive site  for  a  new  court  house  and  civic  center  just 
north  of  the  municipal  building.  The  original  area  was 
acquired  at  a  cost  of  about  six  million  dollars  and  the 
additional  area  at  five  million  dollars,  so  that  the 
carrying  charges  and  incidental  expenses  incurred 
bring  the  total  cost  up  to  fifteen  million  dollars.  This 
tract  of  land  is  in  a  deplorable  condition  consisting  of 
the  ruins  of  buildings  torn  down.  Unless  something  is 
done  towards  the  utilization  of  this  tract  by  the  erec- 
tion of  a  new  city  building  it  will  be  an  extravagance 
and  waste  of  the  municipality's  money. 

The  city's  first  municipal  building  was  presented 
to  the  city  fathers  by  the  Dutch  West  India  Company 
in  1655  and  was  the  cause  of  trouble  even  at  that  early 
date  as  the  following  resolution  of  the  schout,  burgo- 
meesters  and  schepens  shows : 


The  Condition  of  New  York  Citv  149 

"  Whereas  the  Lords  Patrooiis  of  this  Province 
have  been  generously  jjleased  to  grant  the  City  liaJl 
to  this  City,  therefore  early  measures  must  be  taken 
to  repair  and  line  the  said  house  with  boai'ds  —  and 
whereas  it  is  much  encumbered  by  a  (juantity  of  salt 
deposited  therein  by  Cornelius  Schut,  and  otherwise 
cannot  be  conveniently  entered  before  it  be  emptied  of 
certain  goods  and  lodgers;  Therefore  their  Lordships 
are  of  opinion  that  Cornelius  Schut  be  seasonably 
notified  by  the  Messenger,  that  he  provide  himself  a 
storehouse  for  his  salt,  and  those  who  lodge  therein 
with  other  lodgings,  so  that  the  City  Hall  be  not  wholly 
ruined  by  the  salt,  nor  occupied  by  others." 

The  city's  bonded  debt  December  31,  1917,  for 
streets,  highways  and  trunk  sewers  was  $156,119,009. 
The  first  street  paved  in  New  York  City  was  Brouwer 
Straate,  now  Stone  Street,  which  was  paved  with  cobble 
stones  in  1657.  Thirty-nine  years  later  a  contract  was 
made  for  cleaning  the  streets  at  thirty  pounds  sterling 
per  annum ;  a  work  which  had  hitherto  been  done  by  the 
citizens  themselves,  every  man  being  required  to  keep 
the  street  clean  before  his  own  door.  It  was  not  until 
1793  that  street  numbers  were  instituted.  At  present 
the  city  has  over  two  thousand  miles  of  paved  streets. 

High  power  and  high  speed  automobiles  eat  u])  the 
streets  for  general  use,  increase  the  cost  of  police  ]^ro- 
tection  and  subject  pedestrians  and  ordinary  vehicular 
traffic  to  expensive  perils.  This  new  means  of  loco- 
motioji  should  be  made  to  en i-ry  the  full  burden  of  its 
cost. 

The  city  has  1,873  miles  of  sewers.  The  first  sewer 
was  constructed  in  1703  in  Broad  Street  from  the 
corner  of  ^fr.  TicBoytcaux  to  the  u])per  W(>11  by  ^[rs. 
Vt\n  Vleck's,  a  distance  of  eleven  hundred  and  fifty- 
eight  feet  at  a  cost  of  fifteen  shillings  ])er  foot.  This 
first  sewer  was  built  of  wood,  but  in  1745  it  was  rebuilt 
with  stone.  A  petition  of  the  inha])itants  of  Broad  and 
Beaver  Streets  in  17(55  stated  that  the  drains  leadiuLf 


150  Taxation  in  New  York 

into  this  sewer  from  the  various  houses  were  decayed 
and  useless,  and  asked  that  new  drains  be  constructed. 

Following  the  installation  of  the  municipal  water 
supply  furnished  the  city  from  the  Croton  watershed 
in  1842  improved  plumbing  and  greater  sanitary  con- 
veniences were  extensively  introduced  and  the  effect 
of  this  is  seen  in  the  greater  care  given  in  the  con- 
struction of  sewers  dating  from  that  time.  In  1849 
there  were  sixty-nine  miles  of  sewers  in  the  city. 
Before  that  time  the  sewers  and  drains  of  New  York 
City  had  been  built  without  any  definite  plans,  the 
larger  and  more  important  by  the  street  commissioner 
and  the  smaller  ones  by  the  property  owners  to  drain 
their  lots. 

Greater  New  York  is  the  largest  seaport  which  has 
no  definite  policy  with  respect  to  sewage  disposal.  The 
present  method  of  discharging  sewage  into  the  harbor 
along  the  water  front  is  unsatisfactory;  it  creates 
nuisances  along  the  water  front;  it  pollutes  the  public 
bathing  establishments;  it  surrounds  the  city's  recrea- 
tion piers  and  the  slips  and  docks  where  steamers  sail 
for  foreign  and  domestic  ports  with  disagreeable 
odors;  and  it  produces  unsanitary  conditions  in  the 
vicinity  of  market  places  where  vegetables,  fruits  and 
other  infectable  food  products  are  exposed  for  sale, 
and  where,  as  a  matter  of  course,  flies,  rats  and  other 
infection  spreading  vermin  abound. 

At  present  335,600,000  gallons  of  sewage  are  emptied 
daily  into  the  East  and  Harlem  rivers,  164,200,000  gal- 
lons into  the  Hudson  River,  and  104,100,000  gallons 
into  Upper  New  York  Bay.  It  is  estimated  that 
New  York's  sewerage  system  has  cost  over  twenty-six 
million  dollars,  but  many  of  the  old  sewers  were  poorly 
built  and  some  are  in  danger  of  collapse.  There  is  a 
possibility  that  the  sewers  of  Manhattan  will  have  to  be 
rebuilt.  The  1014  report  of  the  Metropolitan  sewage 
commission  states  that  fifty-five  miles  of  the  existing 
sewers  of  Manhattan  island  are  seriously  out  of  repair. 
The  objections  to  the  reconstruction  of  the  sewers  lie 


The  Condition  of  New  York  City  151 

in  the  expense  and  inconvenience  which  the  reconstruc- 
tion would  directly  and  indirectly  entail  upon  the  pub- 
lic. The  plumbing  of  over  one  hundred  and  fifty 
thousand  houses  would  require  to  be  altered  so  that  the 
proper  sewer  connection  could  be  made. 

The  city's  pension  system  needs  overhauling.  City 
Controller  William  A.  Prendergast  testified  before  the 
1915  joint  legislative  committee  for  the  investigation 
of  the  finances  of  the  City  of  New  York  that  under 
existing  law  the  police  force  now  or  heretofore  in  serv- 
ice ^^^ll  according  to  actuarial  computation  draw  more 
than  two  hundred  and  seventy-five  million  dollars  from 
the  city  treasury,  while  firemen,  teachers,  and  other 
branches  of  service  will  be  entitled  to  amounts  only 
less  staggering.  If  the  policy  of  pension  is  not  to  fall 
of  its  own  weight  it  must  be  revised  on  a  uniform  basis 
\vithin  the  limits  of  the  city's  resources.  In  1915  the 
receipts  into  the  police,  firemen  and  teacher's  funds 
amounted  to  $4,535,734,  while  the  disbursements  that 
same  year  were  $4,707,561.  That  means  that  nearly 
two  hundred  thousand  dollars  more  each  year  is  going 
out  of  these  funds  than  is  coming  in.  It  is  only  proper 
that  these  faithful  servants  of  the  city  be  provided  for 
in  their  old  age,  but  disaster  appears  to  be  coming  to 
these  funds  in  the  near  future. 

New  York  City  has  experienced  great  embarrass- 
ment and  loss  in  its  finances  from  the  custom  of  keep- 
ing a  large  amount  of  short  time  commercial  paper  on 
the  market.  The  city  in  August  1914  had  outstanding 
of  such  paper  twenty-five  million  dollars  in  corporate 
stock  notes,  issued  in  anticipation  of  bond  issues,  and 
seventy-three  million  dollars  of  short  time  paper 
chargeable  to  current  revenues  issued  in  anticipation 
of  taxes.  Seventy-seven  million  dollars  of  this  paper 
was  held  in  Europe.  On  account  of  the  crisis  resulting 
from  the  war  the  city  w^as  compelled  to  borrow  of  the 
banks  of  New  York  City  one  hundred  million  dollars 
to  meet  this  paper  and  current  expenses  and  to  charge 


153  Taxation  in  New  Yoek 

off  a  loss  of  more  than  four  million  dollars  in  expenses, 
commissions  and  interest.  In  1907  the  city  was  caught 
in  the  same  way  and  in  each  case  the  city  administra- 
tion regarded  itself  fortunate  in  escaping  a  worse  pre- 
dicament from  a  default  on  the  city's  commercial 
paper. 

The  issuing  of  short  term  paper  in  anticipation  of 
taxes  simply  means  that  the  city  is  spending  iDorrowed 
money  for  its  current  expenses.  By  collecting  taxes 
in  advance  this  can  be  avoided.  The  annual  interest 
charge  for  these  loans  has  averaged  three  and  a  half 
million  dollars.  The  total  amount  paid  in  interest  on 
these  loans  in  the  last  ten  years  has  amounted  to 
$36,470,837. 

When  New  York  City  had  to  borrow  one  hundred 
million  dollars  from  the  New  York  City  banks  in  1914 
the  loan  was  as  embarrassing  to  the  commercial  world 
as  to  the  city.  The  Stock  Exchange  was  closed,  credit 
was  greatly  restricted,  and  a  panic  was  feared.  With- 
out warning,  the  financial  institutions  of  the  metropolis 
were  confronted  mth  the  necessity  of  loaning  the  city 
this  large  sum,  of  which  more  than  seventy-seven  mil- 
lion dollars  had  to  be  paid  abroad  in  gold  or  exchange. 
This  loan  had  to  be  met  to  save  the  credit  of  the  city. 
If  the  city  had  defaulted,  its  credit  would  have  suf- 
fered for  an  indefinite  period. 

The  syndicate  which  financed  this  loan  imposed  as  a 
condition  of  its  negotiation  the  adoption  of  the  pay  as 
you  go  policy  and  the  City's  Board  of  Estimate  on 
September  11,  1914,  adopted  a  resolution  to  that  effect, 
the  principal  features  of  which  are  as  follows :  The  cost 
of  all  improvements  of  the  revenue  producing  class, 
such  as  rapid  transit,  docks,  railway  and  water 
terminals  and  water  supply,  to  be  defrayed  by  the 
issue  of  fifty  year  municipal  bonds  as  heretofore;  but 
the  cost  of  all  permanent  improvements,  other  than 
those  of  the  revenue  producing  class,  to  be  gradually 
until  1918  to  be  entirely  included  each  year  in  the 


The  Condition  of  New  York  City  153 

annual  budget  of  the  city.  If  this  sound  policy  is 
adhered  to  by  future  administrations  it  will  save  the 
city  from  a  great  deal  of  extravagance  and  waste.  The 
pay  as  you  go  policy  is  a  scientific  and  proper  way  of 
financing  public  improvements. 

The  1915  joint  legislative  committee  on  taxation 
reported  that  real  estate  in  New  York  City  was  already 
overtaxed  and  that  its  value  was  in  danger  of  being 
seriously  impaired.  An  investigation  of  a  group  of 
eleven  parcels  of  real  estate  showed  that  it  paid  thirty 
per  cent,  of  net  income  in  taxes.  Another  group  of 
seven  percels  of  real  estate  paid  forty-one  per  cent,  of 
net  income  in  taxes.  Alfred  E.  Marling,  who  was 
chairman  of  Mayor  John  Purroy  Mitchel's  1914  com- 
mittee to  recommend  a  Avay  of  securing  new  sources  of 
revenue  for  the  payment  of  the  cost  of  New  York's 
City  government,  testified  that  based  on  his  thirty- 
eight  years'  experience  as  a  real  estate  broker, 
appraiser  and  manager  in  New  York  City  real  estate 
in  Greater  New  York  was  down  on  its  back  and  could 
not  stand  any  more  burden.  If  increased  taxes  were 
to  be  imposed  the  result  would  be  trouble  and  distress 
of  all  sorts.  To  the  poor  property  owner  it  would 
practically  mean  confiscation. 

The  aggregate  direct  taxes  levied  and  collected  in 
New  York  State  in  1917  for  all  purposes  was  $289,- 
069,646.  Of  this  amount  real  estate  paid  $277,506,860 
or  ninety-six  per  cent.  The  total  revenue  receipts  in 
1917  for  all  purposes,  both  State  and  local,  Miiich 
includes  direct  taxes  and  all  sources  of  revenue  from 
indirect  sources,  was  $390,336,374.  Thus  real  estate 
contributed  over  seventy  per  cent,  of  all  the  expenses  of 
the  cost  of  State  and  local  government.  No  one  dis- 
putes the  fact  that  there  is  as  much  personal  property 
in  the  State  as  real  estate,  in  fact  State  Tax  Conmiis- 
sioner  John  Jacob  Merrill  testif>nng  at  the  legislative 
hearing  in  the  winter  of  1918  upon  the  bill  to  have  a 
fixed  tax  rate  of  seventeen  mills  upon  real  estate  in 
New  York  City  stated  that  there  Avas  three  times  as 


154  Taxation  in  New  York 

much  personal  property  in  the  State  as  there  was  real 
estate.  It  seems  incredible  that  with  all  the  new 
systems  of  taxation  designed  to  reach  personalty  such 
as  inheritance  taxes,  mortgage  taxes,  stock  transfer 
taxes,  corporation  taxes,  liquor  taxes,  secured  debt 
taxes,  and  motor  vehicle  taxes,  that  it  is  impossible  to 
make  personal  property  pay  more  than  three-tenths 
of  the  expense  of  the  cost  of  State  and  local 
government. 

It  is  this  placing  the  burden  on  real  estate  that  is 
working  such  a  great  hardship  to  New  York  City,  and 
until  some  way  is  discovered  of  making  personal 
property  pay  its  just  share  or  one-half  of  the  expense, 
the  condition  in  New  York  City  is  bound  to  grow 
worse.  The  author  feels  a  peculiar  interest  in  the  wel- 
fare of  New  York  City.  His  great  grandfather  served 
in  the  American  army  during  the  Revolutionary  War 
and  in  1776  was  in  Washington's  forces  that  were 
trying  to  protect  New  York  City  from  the  British. 
Thirty-eight  years  later  during  the  War  of  1812  his 
grandfather  responded  to  the  call  of  Governor  Daniel 
D.  Tompkins  for  volunteers  to  protect  New  York 
City,  when  after  capturing  and  burning  the  City  of 
Washington  it  was  feared  the  British  intended  to 
attack  New  York  City.  For  several  months  these  vol- 
unteers served  in  and  about  the  metropolis. 

There  were  those  who  advised  the  author  to 
designate  this  chapter,  The  Plight  of  New  York  City. 
By  this  they  meant  that  conditions  in  New  York  City 
were  desperate.  Of  course  they  are  desperate.  There 
are  many  stupendous  problems  to  be  solved  and 
immense  sums  of  money  to  be  raised.  But  the  author 
is  optimistic  enough  to  believe  that  when  an  equitable 
system  of  taxation  is  arrived  at  whereby  real  estate 
will  not  have  to  pay  all  the  cost  of  the  new  improve- 
ments New  York  City  will  have  new  docks  and  a  freight 
terminal  railroad,  proper  rapid  transit  facilities,  san- 
itary sewage  disposal,  adequate  school  accommoda- 
tions, plenty  of  park  spaces,  and  many  other  needed 


The  Condition  of  New  York  City  155 

improvements.  These  problems  can  be  solved  by  the 
best  citizens  of  the  city  counselling  together  and  this 
comiselling  should  take  place  in  the  Board  of  Alder- 
men. The  best  citizens  of  the  city  should  be  members 
of  the  Board  of  Aldermen.  No  bureaucratic  commis- 
sion can  solve  these  problems. 

Fifty-two  per  cent,  of  the  inhabitants  of  the  State 
reside  in  the  City  of  New  York.  But  the  people  of  the 
whole  State  should  know  New  York  City's  problems 
and  b}^  knowing  render  assistance  in  the  solving  of 
them.  In  the  past  there  has  been  ignorance  and  indif- 
ference regarding  the  problems  peculiar  to  the  country 
sections  by  the  city  people  and  problems  peculiar  to  the 
city  sections  by  the  country  people.  Each  section 
should  co-operate  with  the  other  and  this  can  only  be 
done  by  studying  and  learning  of  each  other's  needs 
and  necessities. 


CHAPTER  XI 
ASSESSMENT  AND  EQUALIZATION 

Article  2  of  the  tax  law  provides  the  method  of 
assessment  of  property  in  this  State  by  local  assessors. 
Section  6  of  the  tax  law  prescribes  that  all  property, 
both  real  and  personal,  shall  be  assessed  at  full  value. 
What  this  value  is  has  not  been  defined  by  statute,  but 
the  courts  have  held  it  to  be  the  amount  of  money  the 
property  would  sell  for  at  a  fair,  free,  and  well  adver- 
tised sale.  How  is  the  assessor  to  know  the  full  value 
of  property  of  which  there  may  have  been  no  sale  in  a 
great  many  years  ?  Even  when  there  are  sales  how  is 
the  assessor  to  know  the  selling  price?  While  some  of 
the  other  states  do.  New  York  has  not  since  Colonial 
days  required  the  individual  taxpayer  to  disclose  the 
amount  of  his  property  to  the  assessor.  This  requires 
the  assessor  to  ascertain  the  value  of  the  property  the 
best  way  he  can.  There  are  constantly  being  published 
quotations  of  the  value  of  stocks,  bonds,  grain,  produce 
and  the  like;  but  no  quotations  of  the  value  of  real 
estate.  The  State  tax  association  at  its  second  State 
conference  held  at  Buffalo  in  January  1912  recom- 
mended that  legislation  be  secured  providing  that 
before  a  deed  of  sale  could  be  recorded  it  would  be 
necessary  to  notify  the  assessor  of  the  selling  price  of 
the  property,  such  notification  to  be  considered  confi- 
dential by  the  assessor,  but  to  be  considered  by  him 
in  making  his  assessment.  It  has  been  impossible  as 
yet  to  secure  any  such  legislation. 

The  only  legislation  in  this  State  requiring  the 
individual  taxpayer  to  report  the  value  of  his  property 
to  the  assessor  applied  only  to  Orange  County  and  was 
passed  by  the  Colonial  Assembly  January  27,  1770.  It 
read  as  follows : 

[156] 


Assessment  and  Equalization  157 

''  Whereas  the  ascertaining  the  Quotas  of  propor- 
tions of  each  respective  Precinct  in  the  County  of 
Orange  towards  the  Taxes,  Rates,  and  Contingent 
County  Charges  to  be  assessed  and  raised  upon  the 
said  County,  hath  hitherto  been  attended  with  great 
Difficulty  and  Uncertainty;  and  given  Occasion  for 
Disputes  and  Discontent,  for  preventing  whereof  for 
the  future 

Be  It  Further  Enacted  that  every  Person  subject 
to  such  Tax  or  Charge,  shall  at  all  Times  when  required 
b};-  the  Assessors  of  the  Precint  wherein  he  resides,  or 
either  of  them  give  him  or  them  a  view  of  all  the 
improved  Land  in  his  Occupation  and  a  just  Account 
of  all  the  Horses  Cattle  and  Chattels  which  are  his 
Property,  and  ought  to  be  subject  to  such  Tax  or 
Charge,  and  if  any  Person  shall  secret  or  conceal  from 
the  Assessors  any  Part  of  his  improved  Land,  Horses, 
Cattle  or  Chattels,  which  ought  to  have  been  subject  to 
such  Tax  or  Charge  he  shall  forfeit  for  every  such 
Concealment  four  Times  the  Amount  or  Value  of  the 
Tax  which  ought  to  have  been  assessed." 

From  personal  property  the  owner  is  allowed  to  have 
his  just  debts  deducted.  In  some  states  the  taxpayer 
is  permitted  to  deduct  only  certain  debts  from  credits ; 
in  other  states  all  debts  may  be  deducted  from  credits. 
But  in  New  York  State  debts  are  not  deducted  from 
credits,  but  from  all  personalty.  The  question  of 
debt  deduction,  whether  limited  to  credits  or  not,  adds 
to  the  difficulty  of  property  assessment. 

Between  the  first  of  January  and  the  first  of  July 
local  assessors  are  to  ascertain  by  diligent  inquiry  all 
the  property  and  the  names  of  all  the  persons  taxable 
in  their  respective  tax  districts.  A  law  passed  by  the 
Colonial  Assembly  March  19,  1774,  provided  that 
assessors  were  to  make  an  assessment  by  proceeding 
from  house  to  house  thruout  the  whole  county  and 
making  out  a  true  and  exact  list  of  all  names  of  the 
freeholders  and  inhabitants  and  setting  down  against 
the  name  of  every  such  person  the  value  of  his  or  her 


158  Taxation  in  New  York 

estate,  real  and  personal,  as  nigh  as  they  can  discover 
the  same  to  be.  The  present  tax  law  does  not  say  any- 
thing about  this  going  from  house  to  house  each  year 
by  local  assessors,  for  in  some  tax  districts  where  there 
are  thousands  of  separate  real  estate  assessments,  it 
is  an  utter  impossibility  for  the  local  assessor  to  make 
any  such  personal  inspection  in  the  time  allotted  by 
law.  New  York  has  always  insisted  on  an  annual 
assessment.  In  1912  according  to  the  United  States 
census  bulletin,  taxation  and  revenue  systems  of  State 
and  local  governments,  thirty-two  states  had  an  annual 
assessment  of  real  estate,  six  states  had  a  biennial 
assessment  of  real  estate,  eight  states  had  a  quadren- 
nial assessment  of  real  estate,  one  state  assessed  land 
every  five  years,  and  one  state  had  an  assessment  only 
by  special  act  of  the  Legislature. 

The  1914  annual  report  of  the  Wisconsin  State  Tax 
Commission  presented  the  following  reasons  for  a 
quadrennial  assessment  of  property: 

*'  Other  states  have  abandoned  annual  assessments 
of  real  estate  as  profitless  and  as  inviting  careless- 
ness in  assessing.  An  assessment  once  in  four  years 
would  tend  to  more  care  on  the  part  of  the  asses- 
sor as  w^ell  as  watchfulness  on  the  part  of  the  taxpaA^er. 
The  expense  incurred  in  making  annual  assessments  is 
not  warranted  by  the  service  rendered.  The  frequency 
of  assessment  of  itself  is  an  invitation  to  copy  the 
former  assessment  roll.  This  is  but  natural.  The 
assessor  reasons  that  no  material  change  can  have 
taken  place  in  so  short  a  time.  This  habit  is  especially 
observable  where  the  assessor  succeeds  himself." 

As  far  as  practicable  assessors  should  make  an 
examination  of  the  property  they  assess,  otherA\dse 
their  assessment  is  little  less  than  guess  work.  When 
we  realize  the  inadequate  pay  most  assessors  receive 
in  country  districts  we  must  conclude  that  their  assess- 
ments must  be  largely  guess  work.  In  1915  the 
assessors  of  a  town  of  this  State  where  the  land  assess- 


Assessment  and  Equalization  159 

ment  was  15,611  acres  and  the  amount  of  the  assess- 
ment was  $263,965 ;  two  of  the  assessors  had  their  bills 
cut  by  the  town  board  from  thirty  dollars  to  eighteen 
dollars,  while  the  third  assessor  had  his  bill  cut  from 
thirty-three  dollars  to  twenty  dollars.  Under  such  cir- 
cumstances what  incentive  is  there  for  an  assessor  to 
make  a  house  to  house  inspection  of  the  property  in 
the  town!  The  average  pay  of  assessors  in  the  country 
towns  thruout  the  State  is  less  than  one  hundred  dol- 
lars a  year.  The  pay  of  assessors  is  two  dollars  a  day, 
altho  town  boards  may  increase  it  to  three  dollars. 

In  this  State  every  town  has  three  assessors  who  are 
elected  by  the  people.  The  office  of  assessor  is  a  dif- 
ficult position  to  fill.  Not  only  is  the  pay  in  most 
sections  inadequate,  but  the  assessor  is  subject  to  com- 
plaints and  oftentimes  abuse  from  dissatisfied  tax- 
payers. Persons  who  are  qualified  to  act  as  assessors 
manage  to  escape  this  duty  and  as  a  result  generally 
unqualified  persons  are  selected.  That  it  has  always 
been  difficult  to  secure  people  to  serve  as  assessors  is 
shown  by  the  general  tax  law  enacted  in  1823  which 
provided  that  any  persons  refusing  to  perform  the 
duties  entrusted  to  them  upon  being  elected  as 
assessors  except  thru  sickness  or  absence  from  the 
town  or  ward  were  liable  to  a  fine  of  fifty  dollars. 

Considerable  agitation  has  been  going  on  in  recent 
years  to  abolish  the  office  of  assessor  for  each  town 
and  in  its  place  have  a  county  assessor,  who  shall  either 
be  elected  b}^  the  people  or  appointed  by  the  State  Tax 
Commission,  and  this  county  assessor  to  have  power  to 
appoint  a  sufficient  number  of  trained  men  as  deputies, 
who  would  make  all  the  assessments  in  the  county  out- 
side of  the  cities.  The  census  bulletin,  taxation  and 
revenue  systems  of  State  and  local  governments  for 
the  year  1912,  gave  seventeen  states  of  the  Union 
having  county  assessors.  These  are  all  southern  and 
western  states  where  the  New  England  idea  of  town 
government  did  not  take  root.  A  county  being  a  much 
larger  unit  than  the  town,  the  county  assessor  will  not 


160  Taxation  in  New  York 

be  liable  to  local  influences  in  making  an  assessment. 
But  an  assessor  should  thoroly  know  the  property  he 
assesses,  and  this  is  impossible  if  the  assessing  unit  is 
too  large. 

The  origin  of  assessor  in  this  State  appears  to  be 
clouded  in  mystery.  The  Duke  of  York's  Laws  promul- 
gated in  the  New  York  Colony  in  1665  provides  that  the 
constable  and  at  least  five  of  the  eight  overseers  who 
constitute  the  governing  body  of  each  town  shall  have 
power  for  the  assessing  of  rates. 

An  act  passed  by  the  Colonial  Assembly  November  1, 
1683,  provided  that  annually  there  should  be  elected  a 
certain  number  out  of  each  city,  town  and  county 
thruout  the  colony  who  shall  have  full  power  and 
authority  to  make  an  assessment  or  certain  rate  within 
their  respective  cities,  towns  and  counties  annually. 
This  is  the  first  mention  of  assessors  in  New  York. 
According  to  an  act  passed  by  the  Colonial  Assembly 
September  29,  1691,  there  were  several  manors  and 
jurisdictions  within  the  respective  counties  which 
refuse  or  neglect  to  elect  assessors  and  collectors,  and 
in  these  cases  assessors  and  collectors  were  to  be 
appointed. 

The  act  of  1691  stated  that  "  Whereas  the  frontiers 
at  Albany  is  in  imminent  danger  to  be  lost,  being  daily 
threatened  to  be  invaded  by  the  French  the  sum  of 
1500£  was  to  be  raised  by  tax  for  the  raising  and  pay- 
ing one  hundred  and  fifty  men  for  the  defence  and  rein- 
forcement of  Albany  for  six  months. "  In  this  case  the 
mayors  and  aldermen  of  the  cities  of  Albany  and  New 
York  and  the  justices  of  the  peace  of  the  several  coun- 
ties were  to  order  the  assessors  and  collectors  for  the 
several  cities,  towns  and  manors  in  their  jurisdiction  to 
assess  and  collect  the  public  rates  for  the  defraying  the 
public  and  necessary  charges  of  this  tax.  The  1500£ 
was  apportioned  by  the  Colonial  Assembly  among  the 
different  tax  districts  as  follows:  City  of  New  York 
300£,  City  and  county  of  Albany  135£,  county  of  West- 


Assessment  and  Equalization  161 

Chester  105£,  county  of  Richmond  90£,  county  of  Ulster 
and  Dutchess  county  187£  and  10  shillings,  county  of 
Suffolk  262£  and  10  shillings,  county  of  Kings  195£, 
county  of  Queens  195£  county  of  Orange  ll£  and  55 
shillings,  county  of  Dukes  18£  and  15  shillings. 

How  unpopular  taxation  was  at  this  early  date  can 
he  inferred  from  the  following  clause  of  this  same  act 
of  1691 :  "  Furthermore  if  any  person  or  persons  who 
shall  be  chosen  assessors  or  collectors  shall  deny,  neg- 
lect or  unequally  and  partially  assess  or  refuse  to  make 
such  assessment  as  required  by  this  act  or  shall  deny, 
neglect  or  refuse  to  collect  any  sum  or  sums  of  money, 
then  the  justices  of  the  j^eace  of  the  cities  and  counties 
where  such  offenders  dwell  shall  commit  such  assessors 
or  collectors  to  the  common  Goale,  there  to  remain 
without  bail  till  they  shall  make  fine  and  ransom  to 
their  majesties  for  such  contempt." 

An  act  passed  by  the  Colonial  Assembly  June  19, 
1703,  provided  for  the  election  of  a  supervisor,  two 
assessors  and  one  collector  in  every  town  on  the  first 
Tuesday  in  April. 

In  1693  there  was  an  act  passed  by  the  Colonial  As- 
sembly establishing  the  Church  of  England  ministry  in 
the  City  of  New  York  and  in  the  counties  of  Queens, 
Kichmond  and  Westchester  and  raising  a  maintenance 
for  this  ministry  by  taxation  annually  as  follows:  New 
York  100£,  Queens  120£,  Richmond  40£,  and  AVest- 
chester  100£.  The  vestrymen  were  given  the  power  to 
assess  the  inhabitants  and  levy  this  tax.  Many  of  the 
other  taxes  in  New  York  City  during  this  period  were 
assessed  and  levied  by  the  vestrymen.  An  act  passed 
by  the  Colonial  Assembly  November  29,  1745,  provided 
that  the  inhabitants  of  the  City  of  New  York  should 
elect  two  vestrymen  for  each  ward  at  an  election  to  be 
held  the  second  Tn(>sday  in  January  of  each  year  and 
that  these  vestrymen  were  to  meet  together  and  agree 
among  themselves  in  what  iirojiortion  or  rule  the  real 

6 


162  Taxation  in  New  York 

aiia  xxirioiial  estates  should  be  taxed  mider  the  penalty 
of  ojb  iur  each  neglect  or  default. 

Even  as  late  as  1758  when  the  sum  of  1200£  was  to 
be  raised  in  New  York  City  on  real  estate  and  jjersonal 
property  for  finishing  the  new  Gaol,  purchasing  Bed- 
loe  's  Island  for  a  pest  house,  defraying  the  unavoidable 
charges  of  the  corporation,  together  with  the  heavy 
burden  of  firewood,  candles  and  other  necessaries  for 
his  Majesties  troops  quartered  in  the  city,  the  tax  was 
to  be  added  to  the  sum  to  be  raised  for  the  minister 
and  the  poor  of  the  city  and  was  to  be  rated  and 
assessed  by  the  vestrymen  of  the  city.  The  further 
fact  that  the  vestrymen  were  required  to  take  an  oath 
to  assess  equally  and  impartially  and  the  wording  of 
this  oath  that  the  vestrymen  were  to  execute  the  duty 
of  assessors  would  indicate  that  New  York  City  did 
not  have  assessors  at  this  early  period,  but  that  the 
vestrj-men  of  the  city  acted  as  assessors. 

But  there  were  assessors  in  Ulster  County  in  1764 
for  an  act  of  the  Colonial  Assembly  passed  October  20, 
1764,  directed  that  the  assessors  of  each  town,  manor 
and  precinct  in  the  county  were  to  assemble  together 
and  agree  upon  a  certain  rule  or  plan  to  calculate  the 
true  value  of  the  real  and  personal  estates  in  the 
county. 

According  to  an  act  of  the  Colonial  Assembly  passed 
January  27,  1770,  assessors  in  Orange  County  were  to 
receive  the  following  compensation:  Assessors  of  the 
Precinct  of  Cornwall  six  shillings  per  day  when  actu- 
ally employed  and  assessors  of  the  Precincts  of  Haver- 
straw  and  Oraugetown  four  shillings  per  day  when 
actually  employed.  Why  the  assessors  of  the  Precinct 
of  Cornwall  should  receive  two  shillings  more  per  day 
than  the  assessors  of  the  Precincts  of  Haverstraw  and 
Orangetown  is  hard  to  understand. 

The  present  tax  statutes  defines  real  estate,  enumer- 
ating in  a  lengthy  description  according  to  its  position 
and  use  forty  types  of  property  liable  for  taxation  as 
real  estate.    Tt  then  defines  personal  property,  giving 


Assessment  and  Equalization  163 

ten  types  of  property  liable  for  taxation  as  personal 
property.  Most  otner  states  tirst  deline  real  estate  in 
tlieir  tax  statutes  and  then  denne  personal  property 
as  all  other  property  not  enumerated  as  real  estate. 
±n  60  uoing  noining  escapes  being-  liable  for  taxation. 
New  York  has  not  followed  this  custom,  and  for  some 
reason  in  enumerating  the  ten  types  of  property  liable 
for  taxation  as  personal  property  good-will  has  not 
been  included  in  the  enumeration.  The  courts  have 
held  therefore  that  good-will  is  not  taxable. 

The  1915  joint  legislative  committee  on  taxation  as- 
certained in  their  investigation  of  many  large  corpora- 
tions that  good-will  very  frequently  represented  large 
earning  power  and  therefore  large  ability  to  pay  taxes. 
In  most  other  states  good-will  is  taxable.  In  many  cor- 
l)orations  their  balance  sheets  show  good-will  to  be 
their  capitalization  of  that  part  of  the  earning  power 
which  is  not  derived  from  tangible  assets.  That  i)art 
of  good-will  which  includes  patents  and  copyrights  of 
course  is  not  taxable  legally  under  the  general  prop- 
erty tax.  But  the  remainder  of  good-will  not  included 
in  patents  and  copyrights  often  represents  a  verj'  large 
amount  of  the  earning  power  of  the  corporation.  Some 
corporations  after  apportioning  to  their  tangible  assets 
a  part  of  their  income  at  a  reasonable  rate  of  interest, 
capitalize  the  remainder  of  their  income  and  designate 
it  as  good-will.  It  is  becoming  the  custom  with  many 
corporations  to  write  off  good-will.  This  does  not 
destroy  the  earning  capacity  of  the  corporation,  but 
only  covers  it  up  in  a  different  form.  In  eitlier  case, 
the  best  taxpaying  ability  of  the  corporation  is  repre- 
sented by  this  intang-ible  asset. 

Various  ty])es  of  corporations  ai'e  dealt  with  very 
unfairly  by  this  system.  A  corporation,  the  nature  of 
whos(^  Inisiness  requires  a  heavy  investment  in  tangible 
})ersonalty,  is  subject  to  a  very  heavy  tax.  But  a  coi*- 
po ration,  the  nature  of  wliose  business  re<|uires  a  very 
small  investment  in  tangible  assets,  escapes  witli 
almost  no  tax. 


164  Taxation  in  New  York 

The  1915  joint  legislative  committee  on  taxation 
compiled  a  list  of  thirty-five  important  domestic  cor- 
porations having  a  large  earning  capacity  as  compared 
^vitll  their  tangible  assets.  This  list  showed  these 
thirty-five  corporations  as  having  an  aggregate  good- 
will valued  at  $287,651,371,  while  the  total  aggregate 
assets  of  these  corporations  amounted  to  $497,327,898, 
and  the  capital  stock  amounted  to  $405,569,070.  The 
aggregate  good-will  was  70.9  per  cent,  of  the  capital 
stock  outstanding  and  57.8  per  cent,  of  the  total  assets. 
All  this  good-will  is  not  taxable  under  the  New  York 
statute. 

The  line  of  demarcation  between  real  estate  and  per- 
sonal property  is  something  hard  to  define.  The  courts 
have  held  that  when  the  apples  are  on  the  tree  they  are 
real  estate,  but  as  soon  as  they  fall  to  the  ground  they 
become  personal  property.  In  like  maimer  grain 
standing  in  the  field  is  real  estate,  but  when  it  is  cut 
down  it  becomes  personal  property.  Professor  Selig- 
man  in  his  "  Essays  on  Taxation  "  speaks  of  the  inge- 
nious definition  of  a  special  franchise  by  the  Legisla- 
ture in  1899  whereby  personal  property  designated 
special  franchises  is  called  real  estate.  A  franchise  in 
general,  if  it  be  any  kind  of  property,  is  personal 
property.  By  calling  personal  property  real  estate 
does  not  make  it  real  estate. 

The  assessors  in  making  their  ass^essment  shall  use 
an  assessment  roll,  the  form  of  which  is  presci-ibcd  by 
the  State  tax  commission.  In  1911  the  Legislature 
amended  section  twenty-one  of  the  tax  law  and  said 
how  this  assessment  roll  should  be  prepared.  It  de- 
clared that  the  assessment  roll  should  consist  of  three 
parts;  part  one  for  the  assessment  of  real  estate,  to 
consist  of  seven  columns;  part  two  for  the  assessment 
of  personal  property,  to  consist  of  seven  columns;  and 
part  three  for  the  assessment  of  special  franchises,  to 
consist  of  six  columns.  What  was  to  be  entered  in 
each  of  these  twentv  columns  was  stated  bv  the  Legis- 


Assessment  axd  Equalization  165 

latiire.  In  cities  the  assessment  roll  was  to  have  an 
additional  column  in  part  one,  the  assessment  of  real 
estate,  in  ^A'hich  was  to  be  set  down  the  value  of  the 
land  exclusive  of  buildings  thereon.  As  amended  the 
section  Avas  found  tt)  be  too  inelastic  to  meet  local 
requirements  and  so  in  1914  the  Legislature  conferred 
on  the  State  tax  commission  the  power  of  prescribing 
the  form  of  the  assessment  roll. 

A  tax  map  should  be  used  in  each  tax  district.  Ac- 
curate, equitable  and  scientific  assessments  cannot  be 
made  without  an  accurate  map  as  a  base.  Tax  maps 
will  enable  a  taxpayer  to  compare  his  assessment  with 
his  neighbor's.  It  is  the  difficulty  that  now  attends 
such  comparison  Avhich  creates  most  of  the  feeling  of 
injustice  and  antagonism.  The  objection  to  paying 
taxes  is  greatly  minimized  when  each  taxpayer  feels 
that  his  neighbors  are  subjected  to  the  same  burdens 
equitably  distributed. 

In  1911  the  Legislature  enacted  section  thirty  of  the 
tax  law  providing  that  assessors  may  use  tax  maps  in 
making  their  assessments.  Some  cities  were  using 
tax  maps  already.  The  State  tax  association  at  its 
second  State  conference  in  1912  urged  that  the  use  of 
tax  maps  be  made  mandator}^  upon  local  assessors. 
However,  the  Legislature  has  not  as  yet  done  more 
than  make  their  use  permissible.  The  tools  of  the 
assessor  are  his  map,  field  book  and  assessment  roll. 

The  Somers  unit  system  of  realty  valuation,  origin- 
ated by  William  A.  Somers  in  1896  at  Saint  Paul,  Min- 
nesota, is  used  by  the  assessors  of  nriny  cities  thrnout 
the  country.  In  New  York  City  the  Hoffman-Neill 
rule  is  used  for  the  measurement  of  depths  of  insido 
lots.  According  to  this  rule  the  efficiency  of  corner 
valuation  is  left  to  the  judgment  of  the  assessors,  and 
not  to  any  unit  of  valuation  as  determined  by  the 
Somers  svstem. 


166 


Taxation  in  New  York 


The  Hoffman-Neill  rule  is  a  table  showing  the  per- 
centage of  value  for  various  depths  of  the  unit,  which 
is  a  100-foot  lot  as  follows : 


Feet 

Per  cent 

1     Feet 

Per  cent 

Feet 

Per  cent 

1 

.0676 
.1014 

22 

23 

,4123 
.4232 

53 

6899 

2 

54 

.6975 

3 

.  1286 

24 

.4339 

55 

.7051 

4 

.  1520 

25 

.4444 

56 

.7126 

5 

.1732 

26 

.4548 

57 

.7201 

6 

.1929 

27 

.4650 

58 

.7275 

7 

.2112 

28 

.4751 

59 

.7348 

8 

.2282 
.2443 

29 

30 

.4850 
.4947 

60 

61 

.7420 

9 

.7492 

10 

.2598 

50 

.6667 

98 

.9882 

20 

.3899 
.4012 

51 

52 

.6745 
.6822 

99 

100 

.9941 

21 

1.000 

Having  determined  the  value  of  the  one-foot  front- 
age, the  assessor,  with  the  help  of  the  above  table,  is 
able  to  ascertain  the  value  of  the  entire  lot.  The  fol- 
lowing is  a  description  of  a  land  value  map  when 
completed : 

An  outline  map  of  the  city  is  used,  subdivided  into 
such  areas  as  may  be  convenient.  On  each  side  of  each 
street,  for  each  block,  the  unit  value  of  the  normalunit 
is  entered.  Thus  the  relation  of  value  on  one  street 
^\^tll  values  on  another  street  is  at  once  apparent. 
Points  showing  high  value  will  grade  off  towards  the 
points  showing  low  values^  and  everywhere  the  values 
on  one  street  will  interlock  with  the  valu(»s  on  the  next 
street  in  a  Avay  that  can  be  seen,  understood,  and  ex- 
plained. Accuracy  and  pi-ecision  will  be  introduced 
into  an  assessment.  The  disturbing  influences  of 
abnormally  high  or  abnormallv  low  sales  will  be 
minimized,  and  the  assessor  will  be  doing  what  he 
ought  to  do;  namely,  exercising  his  judgment  in  assess- 
ing all  lots  within  a  given  area  in  their  relative  values 
to  one  another. 


Assessment  and  Equalization  167 

The  most  difficult  problem  that  the  assessor  encoun- 
ters under  this  system  is  the  valuation  of  corner  lots. 
It  is  obvious  that  a  corner  lot  has  more  value  than  an 
inside  lot.  There  is  no  standard  under  the  Hoffman- 
Neill  rule,  however,  as  to  how  much  greater  the  value 
is.  The  consensus  of  opinion  appears  to  be  that  cor- 
ner influence  varies  according  to  the  use  to  which  the 
property  is  put,  being  greatest  in  retail  business  dis- 
tricts, and  smallest  in  suburban  residence  districts. 
While  this  system  of  valuation  may  seem  mechanical, 
yet  its  accuracy  is  surmised  that  in  New  York  City 
most  purchases  and  sales  of  property  are  based  on  the 
same  scale  or  rule  which  the  assessor  uses. 

The  date  and  first  ap]ih cation  of  the  principles  em- 
bodied in  the  Hoffman-Neill  rule  appears  to  be  clouded 
iTi  mystery.  While  they  are  generally  ascribed  to 
Judge  Murray  Hoffman  of  the  Superior  Court  of  the 
City  of  New  York,  yet  Judge  Hoffman  in  his  book, 
*'  Digest  of  the  Charters,  Statutes  and  Ordinances  of 
and  relating  to  the  Corporation  of  the  City  of  New 
York,"  published  in  1869,  says  that  this  rule  was  first 
adopted  by  Vice  Chancellor  William  T.  McCoun,  Mr. 
Bolton,  late  Master  in  Chancery,  and  John  Slidell. 
William  T.  McCoun  was  Vice  Chancellor  from  ^farch 
16,  1831,  to  May  12,  1946.  Apparently  thus  rule  must 
have  been  developed  during  this  period.  At  first  the 
rule  was  simply  that  the  ordinary  city  lot  fifty  feet 
deep  was  worth  two-thirds  as  much  as  an  adjoining  lot 
one  hundred  feet  deep.  From  this  simple  ])rinciple 
Henry  Harmon  Neill,  real  estate  editor  of  the  New 
York  Evening  Mail,  worked  out  an  elaborate  table. 

The  Somers  system  of  valuation  is  based  on  the 
same  principle,  namely,  that  there  is  a  mathematical 
relation  botween  the  values  of  the  diffei-ent  eitv  sites 
affected  by  the  same  influences,  but  having  a  somewhat 
different  method  of  computation  of  this  relation  ship. 
In  this  svsfem  a  scheme  of  valuing  corner  and  alley 
lots,  and  also  the  value  of  other  irregular  an<l  excep- 
tional shartes  and  sizes  of  land  has  been  worked  out. 


168  Taxation  in  New  York 

111  the  Somers  s^^stem  the  first  procedure  is  to  ascer- 
tain the  value  of  the  unit  foot.  What  Mr.  Somers  calls 
the  unit  foot  is  a  frontage  of  ground  one  foot  Avide  and 
one  hundred  feet  deep,  located  in  the  central  section  of 
a  block  at  a  distance  from  any  street  corner  or  other 
influence  that  might  affect  its  value.  To  appraise  this 
unit  foot  persons  with  a  knowledge  of  city  conditions 
and  of  realty  values  are  called  in.  The  Somers  system 
thus  invites  publicity  and  public  interest.  Mr.  Somers 
says  that  there  always  exists  in  every  city  a  community 
opinion  that  a  certain  street  is  best  for  business  and  a 
consequent  idea  that  land  fronting  thereon  is  the  most 
valuable.  From  this  most  valuable  street  other  streets 
of  less  value  are  compared,  there  being  a  well  defined 
opinion  that  propertv  on  the  less  valuable  street  is  less 
valuable  just  in  proportion  as  the  street  is  less  valu- 
able, and  the  comparison  will  reach  out  from  the  cen- 
ter or  best  portion  of  the  municipality  and  embrace  the 
entire  city. 

Anyone  can  see  the  advantages  of  a  systematized 
method  of  assessment  as  compared  with  the  haphazarci 
guesswork  prevailing  in  so  manv  communities.  Scien- 
tific, exoert  valuation  bv  either  the  Hoffman-Neill  rule 
or  the  Somers  system  will  exert  a  wholesome  influence 
on  the  community  socially.  One  result  will  be  the 
awakening  of  discussion  and  interest  among  the  nrop- 
ertv  owners,  who  under  the  Somers  svstem  will  be 
called  upon  to  appraise  the  unit  foot.  The  economic 
influences  of  the  standardization  of  the  value  of  real 
estate  ur»on  contracting  loans  and  upon  realty  invest- 
ments will  also  be  advantageous. 

CITY  ASSESSMENTS 

The  lot  and  block  svstem  is  the  best  plan  for  map- 
ping in  cities.  This  consists  of  an  actual  map,  based 
on  an  actual  surve^'.  on  which  certain  areas  are  desig- 
nated as  blocks  and  which  are  given  a  fixed  unchange- 
able number.  On  such  a  map  a  block  should  be  bounded 
by  street  lines. 


Assessment  and  Equalization  169 

Witliin  the  block  the  map  will  be  further  subdivided 
according  to  the  individual  ownership  of  parcels.  As 
lots  are  bought  and  sold,  they  may  be  united  or  sub- 
divided and  when  any  change  of  this  kind  occurs,  the 
map  should  be  changed  by  some  competent  surveyor  to 
conform  to  the  new  lines  of  ownership  and  the  date  of 
such  change  noted  on  the  map. 

Within  each  block,  all  the  lots  should  be  numbered 
consecutively,  beginning  with  the  number  one  for  each 
block  and  continuing  around  the  four  sides  of  the  block. 

It  ^\ill  be  found  convenient  to  so  number  the  lots  as 
to  leave  vacant  numbers  for  new  lots  if  there  is  a  pros- 
pect of  subdivision  among  the  existing  lots  at  the  time 
the  first  numbering  is  made. 

In  19]  1  the  Legislature  enacted  that  there  should  be 
a  separate  assessment  of  land  improvements  in  all  the 
cities  of  the  State.  This  method  of  assessment  forces 
the  assessor  to  recognize  the  economic  fact  that  the 
value  of  a  building  is  simply  the  difference  between  the 
value  of  the  ]iarcel  of  land  with  the  building  and  what 
the  same  parcel  Avould  be  worth  if  the  building  were 
removed.  The  difference  betM'een  the  two  methods  is 
slight  when  the  improvements  are  new  or  perfectly 
adapted  to  the  location,  but  in  the  case  of  old  structures 
or  those  which  are  no  longer  suitable  to  the  sites  this 
method  is  supei'ior. 

The  building  must  be  suitable  to  the  site.  A  resi- 
dence standing  in  the  midst  of  business  buildings,  far 
from  the  usual  residence  neighborhood,  Avill  have  small 
selling  value.  It  mav  be  in  the  best  of  repair  and 
admirablv  designed  for  residential  purposes,  but  its 
value  will  be  practicallv  nil,  because  it  is  unsuited  to 
the  citv.  Every  city  has  many  instances  where  the 
transition  from  7-(>sidence  to  business  uses  has  taken 
all  value  from  some  buildin<rs.  To  assess  such  build 
ings  on  the  basis  of  construction  cost  or  on  their  actual 
conditions  as  dwellings  would  be  a  great  injustice  to 
the  o^\^lers. 

It  is  much  more  (lifTieuK  to  establi.^h  standards  for 


170  Taxatioi^  in  New  Yoek 

assessing  buildings  than  for  assessing  land.  The 
assessor  should  have  some  formula,  sufficiently  flexible, 
by  which  to  appraise  the  building.  The  cost  of  con- 
struction for  a  new  building,  of  the  type  of  the  building 
under  consideration,  can  be  worked  out.  This  is  not 
a  difificnlt  problem;  real  estate  men  and  builders  can 
readily  supply  the  assessors  with  this  information. 
From  such  information  he  can  construct  a  table,  made 
up  of  definite  types  of  buildings  of  definite  size  and 
construction.  If  this  table  is  sufficiently  worked  out,  it 
may  be  made  to  include  all  types  of  buildings  coming 
'wathin  his  jurisdiction. 

This  however  does  not  allow  for  depreciation.  It  is 
difficult  to  work  out  tables  of  depreciation  based  upon 
age  that  are  really  satisfactory  or  accurate.  An 
assessor  can  be  sure  of  his  land  values.  But  when  he 
assesses  buildings  by  the  use  of  building  factors,  the 
result  in  each  case  should  be  tested  by  his  judgment  of 
the  additional  selling  value  .which  the  building  gives 
to  the  lot  on  which  it  stands.  If  the  total  of  land  value 
and  building  value  as  thus  assessed  exceeds  the  actual 
selling  value,  the  assessor  should  go  over  his  figures 
and  reduce  his  building  factor.  Otherwise  he  will  not 
make  a  proper  allowance  for  deterioration  or  inade- 
quacy of  the  improvement  to  the  site. 

COUNTRY  ASSESSMENTS 

The  problem  of  fixing  a  standard  of  value  is  pre- 
sented to  the  country  assessor  just  as  to  the  city 
assessor,  but  it  is  not  the  same  problem.  In  cities 
frontage  is  the  chief  element  of  value  in  lots.  But 
frontage  is  of  small  relative  importance  in  the  country. 
To  assess  two  lots  in  a  city,  of  equal  frontage,  but  of 
different  depths,  by  square  foot  rule  would  produce 
gross  inequality.  In  the  country  to  assess  two  farms 
of  equal  area  and  fertility,  but  Avith  unequal  frontage 
on  the  highway,  by  a  front  foot  rule,  would  in  turn 
produce  gross  inequality.  Superficial  area  or  acreage 
must  be  the  rule  for  assessment  in  the  countrv. 


Assessment  and  Equalization  171 

The  country  assessor  does  not  have  to  determine  a 
normal  unit  of  area  as  does  the  city  assessor.  The  acre 
is  the  commonly  accepted  unit.  But  he  has  the  same 
j^robiem  as  the  city  assessor  of  establishing  the  value 
of  his  unit  at  different  points  in  his  district. 

LAND  VALUE  MAPS  FOR  COUNTRY  ASSESSORS 

On  each  road  the  value  of  an  acre  of  each  class  of 
land,  into  which  the  land  in  his  district  is  divided  for 
purposes  of  assessment,  should  be  determined.  From 
such  unit  values  the  value  of  the  acreage  in  each  farm 
can  be  determined,  making  due  allowance  for  rock, 
gully,  hillside,  etc.  The  country  assessor  can  enter  on 
the  maps  at  appropriate  points  the  values  which  he 
has  determined  upon  as  the  normal  value  per  acre  of 
land  of  the  different  classes  of  land.  Then  by  looking 
over  the  maps  as  a  whole  he  can  readily  see  whether  he 
has  made  sufficient  allowance  in  these  acreage  values 
for  differences  of  location,  topography,  transportation 
facilities,  improved  highways,  and  other  advantages  or 
disadvantages. 

The  assessment  of  buildings  in  the  country  does  not 
present  problems  differing  from  assessment  of  build- 
ings in  the  city,  and  the  country  assessor  can  use  the 
same  rules  as  the  city  assessor.  He  will  have  fewer 
types  to  deal  with,  and  the  problem  should  be  easier 
for  that  reason. 

In  the  932  towns  of  the  Stnte  the  assessors  are 
required  bv  law  to  tentatively  complete  their  assess- 
ments b\'  the  first  of  August.  They  are  to  conspicuously 
post  in  three  or  more  public  places  in  the  town  a 
notice  stating  that  they  have  completed  the  assess- 
ment roll,  that  it  is  on  file  with  one  of  their  number 
open  for  inspection  and  that  on  the  third  Tuesdav  in 
August  any  person  aggrieved  with  the  assessment  may 
appear  before  the  assessors  and  file  a  statement  under 
oath  specifying  the  respect  in  which  the  assessment 
complained  of  is  incorrect.    The  assessors  shall  after- 


172  Taxation  in  New  York 

wards  fix  the  value  of  the  property  of  tlie  complainant 
and  for  that  purpose  may  increase  or  diminish  the 
assessment  thereof. 

In  the  cities  the  procedure  is  practically  the  same  as 
in  the  towns  except  that  in  the  cities  tlie  dates  vary 
owing  to  the  fact  that  there  is  no  uniformity  among 
the  cities  as  to  the  closing  of  the  fiscal  tear. 

When  the  assessment  roll  is  finally  completed  the 
assessors  shall  take  the  f ollo^\ing  oath : 

"  We,  the  undersigned,  do  severally  depose  and 
swear  that  we  have  set  down  in  the  foregoing  assess- 
ment roll  all  the  real  estate  situated  in  the  tax  dis- 
trict in  which  we  are  assessors,  according  to  our  best 
information  ;  and  that,  with  the  exception  of  those  cases 
in  which  the  value  of  the  said  real  estate  has  been 
changed  by  reason  of  proof  produced  before  us,  we 
have  estimated  the  value  of  the  said  real  estate  at  the 
sum  which  a  majority  of  the  assessors  have  decided  to 
be  the  full  value  thereof;  and,  also,  that  the  said  assess- 
ment roll  contains  a  true  statement  of  the  aggregate 
amount  of  the  taxable  personal  estate  of  each  and  every 
person  named  in  such  roll  over  and  above  the  amount 
of  debts  due  from  such  persons,  respectively,  and 
excluding  such  stocks  as  are  otherwise  taxable,  and 
such  other  propertv  as  is  exempt  by  law  from  taxation, 
at  the  full  value  thereof,  according  to  our  best  .I'ndg- 
ment  and  belief," 

Tt  is  interesting  to  trace  tlie  evolution  of  the  assess- 
ors' oath  down  from  colonial  days.  Tn  1691  assessors 
were  to  take  this  oath:  ''Well,  trub'  oqnally  and 
impartiallv  in  due  r>ror)ortion  as  it  shall  appear  to 
them  according  to  their  best  understanding  to  Assesse 
and  rate  the  Inhabitants  residonts  and  Freeholders  of 
the  respective  places  for  Avhich  they  shall  be  Chosen 
Assessors." 

In  1721  the  vestrymen  of  the  Citv  of  New  York  and 
the  counties  of  Queens,  Richmond  and  Westchester 
were  to  tak(>  the  following  oath:    ''  You  do  Sware  on 


Assessment  and  Equalization  173 

the  holy  Evangelist  that  you  and  every  of  you  Shall 
^vel  and  truly  Execute  the  Duty  of  an  Assessor  and 
Equally  and  Impartially  Assess  the  Severall  Freehold- 
ers and  Inhabitants  according  to  the  Value  of  their 
Respective  Estates  in  an  Equal  proportion  in  every 
of  your  Respective  City  Counties  and  precints  for 
which  you  are  Chose  Vestry  Men  and  According  to 
your  best  Skill  and  Knowledge  therein  you  shall  Spare 
Noe  Person  for  favour  or  affection  or  grieve  any  Per- 
son for  hatred  or  111  will  so  help  you  God." 

In  1764  the  assessors  of  the  City  of  Albany  had  to 
subscribe  to  the  following  oath:  ''  I  A.  B.,  do  Swear 
upon  the  Holy  Evangelists  of  Almighty  God  that  I 
will  Well  and  trulj',  Equally,  and  Impartially,  and  in 
due  Proportion  according  to  the  best  of  my  Skill  and 
understanding  assess  all  the  Whole  Estates,  Real  and 
Personal  of  all  the  freeholders  Inhabitants,  Residents 
and  Sojourners  within  the  Citv  of  Albanv  so  help  me 
God." 

Many  similar  oaths  for  assessors  are  to  be  found  in 
this  colonial  period  and  it  is  no  wonder  people  refused 
to  serve  as  assessors  and  that  justices  of  the  peace 
had  to  commit  to  jail  those  refusing  thus  to  serve. 

On  or  before  the  fifteenth  of  September  the  assess- 
ors in  the  to-\\Tis  shall  make  two  copies  of  the  assess- 
ment roll  and  file  one  in  the  office  of  the  town  clerk.  On 
the  first  day  of  December  the  town  clerk  shall  deliver 
the  assessment  roll  to  the  supervisor  of  the  tax  district 
embraced  therein.  At  the  annual  meeting  of  the  board 
of  supervisors  of  each  county,  the  assessment  rolls  of 
the  several  tax  districts  in  the  county  shall  be  examined 
by  the  supervisors  and  any  manifest  clerical  oi-  other 
errors  in  the  assessment  rolls  shall  be  corrected  by 
them.  The  supervisors  shall  also  ascertain  if  the  asess- 
ments  in  all  the  tax  districts  of  the  county  have  been 
made  by  the  assessors  at  full  value  as  required  by  sec- 
tion six  of  the  tax  law.  If  the  assessments  in  any  town 
or  city  have  not  been  made  at  full  value,  then  the  board 


174  Taxation  in  New  York 

of  supervisors  shall  equalize  the  assessments  for  the 
whole  county  according  to  the  rule  prescribed  in 
Section  50  of  the  tax  law.  As  the  State  board  of  equali- 
zation in  equalizing  between  counties  for  the  levying 
of  State  taxes  must  follow  this  same  rule  laid  down  in 
section  fifty  of  the  tax  law,  it  is  worthy  of  description. 

"The  board  of  supervisors  of  each  county  in  this 
State,  at  its  annual  meeting  shall  examine  the  assess- 
ment rolls  of  the  several  tax  districts  in  the  county,  for 
the  purx30se  of  ascertaining  whether  the  valuations  in 
one  tax  district  bear  a  just  relation  to  the  valuations 
in  all  the  tax  districts  in  the  county;  and  the  board 
may  increase  or  diminish  the  aggregate  valuations 
of  real  estate  in  any  tax  district  in  accordance  with  the 
f olloAving  equalization  rule :  First,  the  ratio  or  per- 
centage w^hich  the  assessed  value  of  the  real  property 
in  each  district  bears  to  its  full  value  shall  be  estab- 
lished by  the  board  upon  proper  inquiry  and  inves- 
tigation conducted  by  it  and  shall  be  stated  in  a  reso- 
lution by  the  board  after  such  inquiry  and  investiga- 
tion. Second,  from  such  ratio  or  percentage  values, 
the  board  shall  determine  the  aggregate  full  value  of 
all  real  property  of  each  tax  district  by  dividing  the 
assessed  value  thereof  by  the  ratio  or  percentage  valne 
as  ascertained  and  fixed  for  that  district.  Third,  the 
average  rate  of  assessment  of  the  real  property  in  the 
county  shall  then  be  determined  by  dividing  the  aggre- 
gate assessed  value  of  the  real  property  in  all  the  tax 
districts  by  the  aggregate  full  valne  thereof  as  ascer- 
tained in  the  manner  aforesaid.  Fourth,  the  true 
equalized  value  for  each  tax  district  shall  then  be 
determined  by  multiplying  the  full  value  of  such  real 
property  in  that  tax  district  by  the  average  rate  of 
assessment  for  the  county.  Fifth,  deduct  from  or  add 
to  the  assessed  value  of  the  several  tax  districts  the 
difference  between  the  assessed  value  and  the  equalized 
value  as  so  ascertained  so  that  the  amount  which  the 
respective  tax  districts  are  increased  or  diminished 


Assessment  and  Equalization  175 

from  the  assessed  value  will  be  shown,  and  the  total 
assessed  value  for  the  comity  will  not  be  increased  or 
diminished.  Any  written  or  documentary  evidence 
upon  which  the  percentage  for  the  several  tax  districts 
are  determined  by  the  board  shall  be  preserved  and  an 
abstract  of  the  same  published  with  the  table  of  rates 
in  the  proceedings  of  the  board  of  supervisors. 

Anyone  can  notice  the  incongruity  in  these  sections 
of  the  tax  law.  First,  according  to  Section  6  of  the 
tax  law,  assessors  are  to  assess  property  at  full  value, 
and  according  to  Section  38  of  the  tax  law,  assessors 
are  to  make  an  oath  that  they  have  assessed  prop- 
erty at  full  value;  but  Section  50  of  the  tax  law 
takes  it  for  granted  that  assessors  have  not  assessed 
property  at  full  value,  and  authorizes  boards  of  super- 
visors to  equalize  real  estate  assessments.  If  property 
had  been  assessed  at  full  value  there  would  be  nothing 
to  equalize. 

The  State  controller  notifies  boards  of  supervisors 
of  the  amount  of  money  each  county  shall  le\'^^  for 
State  taxes,  armory  taxes,  and  court  and  stenographers 
taxes.  The  board  of  supervisors  in  each  county  shall 
make  up  the  budget  for  that  county  which  amount  they 
shall  levy  as  county  taxes;  and  they  shall  also  make 
up  the  budget  for  each  town,  which  amount  they  shall 
levy^  as  town  taxes.  In  some  counties  the  boards  of 
suprevisors  also  levy  the  city  taxes.  They  now  ascer- 
tain the  aggregate  taxes  for  each  tax  district  of  the 
county  which  for  towns  is  the  sum  of  the  State  taxes, 
armory  taxes,  court  and  stenogra]ihers  taxes,  county 
taxes  and  town  taxes.  They  next  ascertain  the  tax  rate 
for  each  tax  district  of  the  county.  Then  taking  each 
assessment  roll  the  board  of  su])ervisors  compute  the 
tax  for  each  individual,  corporation  or  piece  of  prop- 
erty assessed  tlieroin,  and  in  a  separate  column  in  such 
assessment  roll  opposite  to  the  sums  set  do^\^^  as  the 
valuation  of  real  and  personal  property  they  place  the 
sum  to  be  paid  as  a  tax  thereon.    Such  assessment  roll 


176  Taxation  in  New  York 

shall,  when  the  warrant  under  the  seal  of  the  county, 
signed  by  the  chairman  and  clerk  of  the  board  of  super- 
visors, is  annexed  thereto,  become  the  tax  roll  of  the 
tax  district.  This  warrant  commands  the  tax  collector 
of  each  tax  district  to  collect  from  the  several  persons 
or  corporations  named  in  the  said  tax  roll  the  several 
sums  mentioned  in  the  last  column  thereof,  opposite 
their  respective  names. 

Any  person  or  corporation  aggrieved  at  their  assess- 
ment may  within  thirty  days  after  the  warrant  under 
the  seal  of  the  county  signed  by  the  chairman  and 
clerk  of  the  board  of  supervisors  is  annexed  to  the  tax 
roll,  apply  to  a  justice  of  the  supreme  court  for  a  writ 
of  certiorari  to  review  the  assessment.  The  justice  of 
the  supreme  court  may  then  review  the  assessment  and 
if  he  deems  it  too  high,  reduce  the  same  to  whatever  he 
thinks  is  a  true  valuation. 

Many  are  unfamiliar  with  what  the  special  taxes 
called  armory  taxes,  and  court  and  stenographers 
taxes,  really  are.  Suffice  it  to  say  that  down  to  1912 
the  support  and  maintenance  of  the  armories  was  a 
county  charge  and  were  included  in  the  county  taxes. 
In  that  year  a  State  armory  commission  was  created 
to  have  charge  of  the  armories  and  the  expense  was  not 
assumed  by  the  State  and  inclnded  in  the  State  taxes, 
but  was  made  a  special  tax  and  levied  against  the 
counties.  This  special  tax  known  as  armory  taxes  is 
confusing  to  the  people  Avho  do  not  understand  what 
it  really  is.  It  should  be  abolished,  and  this  expense 
be  included  in  either  State  taxes  or  comity  taxes. 

The  condition  is  still  worse  in  Avhat  are  known  as 
court  and  stenographers  taxes.  The  salaries  of  the 
justices  of  the  supreme  court  are  |)aid  directly  Iw  the 
State  and  are  inclnded  in  State  taxes;  but  the  salaries 
of  the  stenographers  and  other  court  attendants  are 
not  paid  by  the  State,  but  are  made  a  special  tax  called 
court  and  stenographers  taxes  and  levied  against  the 
counties.    Can  anything  be  more  nonsensical?    Special 


Assessment  and  Equalization  177 

taxes  are  confusing ;  and  no  tax  skould  ever  be  levied 
of  which  the  people  do  not  understand  its  nature. 

Upon  receiving  the  tax  roll  and  warrant  command- 
ing him  to  collect  the  taxes  named  therein,  the  collector 
shall  conspicuously  post  in  five  places  in  the  tax  dis- 
trict a  notice  specifying  one  or  more  convenient  places 
in  such  tax  district  where  he  will  attend  from  nine 
•o'clock  in  the  forenoon  until  four  o'clock  in  the  after- 
noon, at  least  three  days,  and  if  in  a  city,  at  least  five 
days,  in  each  week  for  thirty  days.  The  collector  shall 
attend  accordingly,  and  any  person  may  pay  his  taxes 
to  such  collector  at  the  time  and  place  so  designated. 
In  a  city,  the  notice  in  addition  to  being  posted  shall 
be  published  once  in  every  week,  for  two  weeks  succes- 
sively, in  a  newspaper  published  in  such  city.  Rail- 
road, telegraph,  telephone,  electric  light,  and  gas  com- 
panies are  allowed  to  pay  their  taxes  to  the  county 
treasurer,  and  not  to  the  tax  collector. 

Each  collector  shall  immediately  upon  the  expiration 
of  his  warrant  make  and  deliver  to  the  county  treasurer 
an  account  of  unj^aid  taxes,  upon  the  tax  roll  annexed 
to  his  warrant,  which  he  shall  not  have  been  able  to 
collect,  verified  by  his  affidavit,  that  the  sums  men- 
tioned therein  remain  unpaid,  and  that  he  has  not, 
upon  diligent  inquiry,  been  able  to  discover  any  per- 
sonal property  out  of  w^hich  the  same  could  be  col- 
lected by  levy  and  sale.  If  a  collector  of  a  city  he 
shall  turn  over  the  moneys  collected  to  the  county 
treasurer;  but  if  a  collector  of  a  town  he  shall  turn 
over  to  the  county  treasurer  only  the  remainder  of  the 
moneys  collected,  after  paying  to  the  su]iervisor  all  the 
moneys  levied  therein  for  the  support  of  highways  and 
"bridges,  moneys  to  be  expended  by  overseers  of  the 
poor  for  the  support  of  the  poor,  and  moneys  to  defray 
any  town  expenses  or  charges. 

Outside  of  the  forest  preserve  the  county  treasurer 
shall  sell  property  for  unpaid  taxes.  In  the  forest  pre- 
serve the  State  controller  shall  sell  ))ro]ierty  for  unpaid 
taxes. 


178  Taxation  in  New  York 

Considerable  agitation  has  been  going  on  during  the 
last  decade  to  give  the  State  tax  commission  power  to 
order  a  reassessment  of  property  when  they  have  rea- 
son to  believe  that  the  assessment  in  any  tax  district 
shows  undervaluations,  inequality,  omissions  or  irreg- 
ularities sufficient  to  make  it  inequitable  as  between 
owners  of  real  property  taxable  within  the  tax  dis- 
trict or  as  between  the  tax  district  and  other  tax 
district  in  a  county.  The  State  tax  commission  has 
repeatedly  asked  the  Legislature  for  this  power  in 
their  annual  reports  to  the  Legislature,  and  the  State 
tax  association  has  recommended  that  this  power  be 
granted  to  the  State  tax  commission,  but  as  yet  the 
Legislature  of  this  State  has  refused  to  grant  any 
such  power.  Li  1905  the  Wisconsin  Legislature 
granted  such  power  to  the  State  tax  commission  of 
that  State. 

In  1915  the  New  York  Legislature  enacted  section 
173-A  of  the  tax  law  which  prescribes  that  the  State 
tax  commission  may  apply  to  a  justice  of  the  supreme 
court  for  a  reassessment  of  property,  but  in  the  cases 
thus  brought  the  justice  of  the  supreme  court  has 
refused  to  order  a  reassessment.  In  regard  to  the 
assessment  of  property  the  New  York  State  tax  com- 
mission has  advisory  jjowers  only,  for  altho  it  may 
advise  assessors  how  to  assess  property  the  assessors 
can  do  very  much  as  they  please.  No  longer  as  was 
the  case  in  colonial  days  can  assessors  be  committed  to 
jail  by  justices  of  the  peace  for  refusing  to  make 
assessments  or  for  unequally  or  partially  making 
assessments. 

A'illage  taxes  and  school  taxes  are  not  levied  by  the 
board  of  supervisors.  The  village  trustees  levy  the 
village  taxes  and  the  school  ti'ustees  levy  the  school 
taxes.  The  town  assessment  roll  prei)ared  by  the  town 
assessors  is  generally  used  for  the  levying  of  these 
taxes  altho  both  the  village  trustees  and  the  school 
trustees  make  clianges  according  as  there  have  been 


Assessment  and  Equalization  179 

changes  in  the  property  since  the  assessment  roll  was 
prepared.  A  great  convenience  to  the  taxpayer  would 
be  a  simplification  of  these  taxes,  so  that  there  might 
be  one  assessment  and  one  levy.  This  could  be  accom- 
plished by  having  thi;  board  of  supervisors  levy  all 
taxes,  including  State,  armory,  court  and  stenogra- 
phers, county,  town,  village,  and  school  taxes.  The 
multiplicity  of  these  taxes  is  a  source  of  annoyance  to 
taxpayers,  both  corporations  and  individuals. 

In  equalizing  real  estate  assessments  the  board  of 
supervisors  of  each  county  are  to  ascertain  the  ratio 
or  percentage  which  the  assessed  value  of  the  real 
estate  in  each  district  bears  to  its  full  value.  Section 
50  of  the  tax  law  states  that  they  are  to  do  this  upon 
proper  inquiry  and  investigation.  The  best  way  to  do 
this  is  to  obtain  the  sales  of  real  estate  in  each  tax 
district  for  a  period  of  five  years  and  then  by  com- 
paring these  sales  with  the  assessment  of  the  sam(^ 
property  determine  whether  the  property  is  assessed 
at  full  value  or  not. 

By  using  a  five  year  period  it  is  possible  to  obviate 
errors  resulting  from  an  unusual  condition  of  the 
market  in  any  year.  Thus  a  larger  number  of  sales  are 
secured  as  well  as  a  greater  variety  of  assessments 
and  the  aggregate  of  all  sales  made  compared  witli  the 
aggregate  assessments  ordinarily  >ields  a  safe 
average. 

A  normal  sale  in  etTect  represents  the  testimony  of 
both  purchaser  and  seller  as  to  the  value  of  the 
property  conveyed.  The  one  parts  witli  his  money  and 
the  other  with  his  ]n*opertv  on  the  basis  of  the  con- 
sideration paid.  When  such  witnesses  are  multiplied 
many  times  they  furnish  tlie  surest  test  of  pi'ojx'rty. 

It  is  a  sad  commentary  on  our  system  of  taxation 
that  real  estate  has  to  bear  practically  all  the  expense 
of  government  while  personal  properly  escapes.  If  a 
careful  survey  of  the  State  was  made  it  would  be 
ascertained   that    there  was   more   ix-rsonal    pi-ojierty 


180  Taxation  in  New  Yoek 

than  real  estate.  State  Tax  Commissioiier  John  Jacob 
Merrill"  testified  before  a  legislative  committee  in  the 
winter  of  1918  that  there  were  three  times  as  much 
I^ersonal  propert}^  in  the  State  as  there  was  real 
estate. 

In  1899  the  Legislature  enacted  what  is  known  as  the 
special  franchise  tax  law.  This  provided  that  public 
service  corporations  using  the  public  streets  should 
be  assessed  by  the  State  tax  commission.  No  rule  or 
method  was  prescribed  by  the  Legislature  as  to  how 
this  assessment  was  to  be  made  except  that  the  intangi- 
ble rights  or  franchises  of  these  corporations  which  is 
personal  property  should  be  added  to  the  tangible 
property  of  the  corporations  existing  in  the  public 
streets  and  all  of  it  called  real  estate.  If  the  Legisla- 
ture can  so  easily  change  personal  property  to  real 
estate  then  by  legislative  fiat  black  can  be  made  white 
by  simply  calling  it  so. 

No  other  state  in  the  Union  has  adopted  a  special 
franchise  tax  law  and  its  operation  in  this  State  has 
entailed  a  vast  amount  of  litigation.  In  1903  Goveri.or 
Benjamin  Barker  Odell  m  his  annual  message  to  the 
Legislature  condemned  the  law  as  follows:  "  The 
special  franchise  tax  law,  which  is  still  the  subject  of 
litigation  seems  to  me  thru  the  feAv  years  that  it  has 
been  in  operation  to  have  demonstrated  that  it  is 
inequitable,  and  a  source  of  annoyance  and  constant 
litigation."  On  January  1,  1918,  therp  was  still 
$1,572,503,783  special  franchise  assessments  in  litiga- 
tion and  some  of  these  assessments  extended  as  far 
back  as  1900  the  first  year  special  franchise  assess- 
ments were  made. 

The  common  procedure  seems  to  be  for  corporations 
to  take  out  writs  of  certiorari  as  soon  as  special  frnn- 
chise  assessments  are  made  and  these  cases  drag  along 
for  years  in  the  courts  and  when  finally  settled  are 
compromised  sometimes  as  low  as  fiftv  per  cent,  of  the 
assessment.  Thus  as  a  revenue  producer  the  law  has 
been  a  failure. 


Assessment  and  ElQrALizAxioN  181 

A  much  better  plan  would  be  to  have  the  State  tax 
commission  assess  all  the  property  of  public  service 
cor2)oratioiis  both  in  tlie  streets  and  outside  of  the 
streets.  According  to  the  1912  census  bulletin, ''  Taxa- 
tion and  revenue  systems  of  State  and  local  govern- 
ments," thirty-six  states  of  the  Union  liatl  some  or  all 
of  their  public  service  corporations  assessed  by  some 
State  board  instead  of  by  local  assessors.  New 
York  is  far  behind  most  of  the  other  states  in  this 
respect. 

It  would  be  unfair  to  close  this  chapter  without  pay- 
ing tribute  to  those  men  who  have  ])erformed  tlie  office 
of  assessors  for  nearly  two  hundred  years  in  New 
York  as  a  colony  and  State.  However  faulty  and 
imperfect  their  work  has  been,  it  has  been  the  work 
that  has  brought  to  the  treasury  the  money  that  has 
kept  the  government  going.  They  have  been  inade- 
quately paid  and  they  have  had  to  bear  the  abuse  of 
their  fellow  men,  yet  without  the  work  of  the  assessors 
there  would  have  been  no  money  to  su]iport  education, 
carry  on  internal  improvements,  equip  soldiers,  pay 
salaries  of  government  officials,  and  provide  charita- 
ble aid  to  the  indigent  and  disabled.  High  officials  of 
State  are  accustomed  to  sneer  at  country  assessors,  but 
country  assessors  have  in  the  past  and  are  still  per- 
forming a  vital  functior.  in  the  complex  system  of  our 
ii'ovci-nmcnt. 


CHAPTER  XII 
EXEMPTIONS 

In  1917  the  real  estate  exemptions  in  New  York 
State  amounted  to  $2,747,673,448.  The  total  amount  of 
property  assessed  in  1917  including  both  real  estate 
and  personal  property  was  $13,054,319,369.  This  would 
indicate  that  seventeen  per  cent,  of  all  the  property  in 
the  State  was  exempted  from  taxation.  But  while  the 
assessed  property  in  the  State  has  increased  twenty- 
nine  per  cent,  in  the  last  ten  years,  the  exempt  property 
has  increased  sixty-six  per  cent,  in  the  same  length  of 
time.  If  the  exempt  property  in  the  State  continues  to 
increase  faster  than  the  assessed  property  there  may 
come  a  time  when  some  legislation  will  be  necessary 
to  check  this  rapid  and  continuous  increase.  In  1901 
an  amendment  to  the  State  constitution  was  adopted 
by  the  people  prohibiting  special  laws  exempting 
property  from  taxation. 

No  citizen  should  be  exempt  from  the  duty  of  con- 
tributing to  the  support  of  the  State  on  personal  or 
class  considerations.  In  France,  pre\dous  to  the 
French  Eevolution  of  1789,  all  taxes  were  imposed 
upon  the  third  estate,  the  clergy  and  nobility  being 
exempt.  To-day  tax  exemptions  must  apply  to  some 
condition  or  quality  of  property,  and  not  to  individuals 
or  classes.  Tax  exemptions  should  rest  upon  one  of 
three  considerations.  First,  the  State  should  not  tax 
itself.  Second,  property  which  is  believed  to  assist 
the  State  in  the  fulfillment  of  its  public  functions 
should  be  exempt  from  taxation.  Third,  the  State 
should  not  tax  capital  regarded  as  essential  for  extend- 
ing the  source  of  future  income. 

There  is  little  to  be  said  concerning  the  first  con- 
sideration that  the  State  should  not  tax  itself.  There 
is  no  reason  why  it  should  tax  itself,  nor  could  such 

ri82] 


Exemptions  183 

a  procedure  influence  in  any  way  its  real  financial 
standing.  The  apparent  income  might,  it  is  true,  be 
increased  by  this  means,  but  the  real  income  would  in 
no  manner  be  affected.  All  governmental  property, 
such  as  federal,  state,  county,  city,  town,  village  and 
school,  should  be  exempt  from  taxation. 

But  all  governmental  property  is  not  exempt  from 
taxation  in  this  State.  Lands  belonging  to  the  State 
in  the  forest  preserve  are  taxable  for  local  purposes. 
When  New  York  first  began  to  purchase  land  in  the 
Adirondack  and  Catskill  Mountains  in  1883,  a  hard- 
ship would  be  entailed  upon  localities  in  supporting 
their  local  goverimient  if  a  large  percentage  of  the 
property  in  such  localities  were  to  be  exempted  from 
taxation.  The  Legislature  at  that  time  recognized  the 
justice  of  this  and  provided  that  such  State  property 
should  contiime  to  support  the  local  government.  How- 
ever, the  amount  such  State  property  can  be  assessed 
at  is  determined  by  the  State  controller. 

In  1911  the  Legislature  enacted  that  State  property 
located  in  Rockland  County  should  be  subject  to  taxa- 
tion. This  act  appears  to  be  directed  at  Letchworth 
Village  at  Thiells,  which  is  a  charitable  institution. 
For  school  purposes  some  of  the  State  property  located 
in  Clinton,  Dutchess,  Oneida,  Orange,  Rockland, 
Ulster  and  Westchester  counties  is  subject  to  taxation. 

Municipal  property  located  outside  of  the  municipal- 
ity is  taxable.  New  York  City's  waterworks  property 
located  in  the  Catskill  watershed  is  taxable,  and  while 
there  is  agitation  to  have  such  property  exempted,  jus- 
tice requires  that  it  bear  its  share  of  the  burden  of  the 
support  of  the  government  of  the  locality  where  it  is 
located. 

"WHien  we  come  to  the  salaries  of  public  officers  the 
rule  that  the  State  should  not  tax  itself  does  not  apply. 
The  federal  income  tax  law  of  1861  and  1013  recognized 
no  difference  between  the  salaries  of  federal  officers 
and  the  earnings  or  the  profits  of  the  business  man  as 


184  Taxation  in  New  Yoek 

a  basis  for  imposing  the  tax;  and  this  law  follows  the- 
practice  of  European  states.  The  reason  for  making, 
a  distinction  between  public  property  and  the  salaries 
of  public  officials  lies  wholly  upon  the  surface.  The 
receipts  from  an  income  tax  is  for  the  use  of  the  pub- 
lic and  discharges  its  duty  to  the  public  by  being  used 
for  a  public  purpose;  the  salary  of  an  official  on  the 
other  hand,  is  for  his  private  expenditure  as  a  citizen. 
Altho  a  public  officer's  salary  is  compensation  for  a 
public  service,  yet  this  fact  does  not  change  its  private 
character.  The  same  as  the  fee  of  a  doctor  or  lawyer, 
or  the  profits  of  a  merchant  or  manufacturer,  it  con- 
stitutes a  fund  for  domestic  expenditures. 

There  is  a  peculiar  relation  between  the  federal  gov- 
ernment and  the  state  governments.  The  courts  have 
assumed  that  neither  grade  of  government  should  be 
jeopardized  by  any  act  of  the  other.  Each  is  sovereign 
within  its  own  jurisdiction,  and  the  integrity  of  the 
Union  as  constituted  demands  the  continued  exer- 
cise by  each  grade  of  government  of  all  powers  and 
privileges  with  which  it  has  been  intrusted.  Thus  from 
reasoning  along  this  premise,  it  has  been  held  that  the 
salaries  of  officials  paid  by  one  grade  of  government 
cannot  be  taxed  by  the  other,  since  in  view  of  Chief 
Justice  John  Marshall's  celebrated  decision  of  McCul- 
loch  versus  the  State  of  Maryland,  that  the  power  to 
tax  is  the  power  to  destroy,  this  would  give  to  either 
government  the  power  to  destroy  the  agencies  by  which 
the  other  is  alone  capable  of  performing  its  public 
duties  or  of  continuing  its  active  existence.  For  this 
reason  the  federal  income  tax  exempts  officers  and 
employes  of' the  State  government  and  its  political 
subdivisioiis.  A  State  income  tax  would  exempt  fed- 
eral officers  and  employes. 

It  is  customary  for  states  to  exempt  from  taxation 
the  bonds  which  they  issue,  the  exemption  being  made 
a  part  of  the  contract  between  themselves  and  the 
public  creditors.    There  has  been  much  criticism  as  to 


Exemptions  185 

the  propriety  of  this.  The  defence  of  this  exemption 
lies  ill  the  fact  that  a  bond  which  guarantees  perpetual 
exemption  from  taxation  will  bear  a  much  higher  price 
than  a  bond'  subject  to  the  uncertainties  of  subse- 
quent taxation,  and  usually  when  the  government 
issues  bonds  it  is  in  pressing  need  of  funds,  and  so  it 
is  deemed  wise  to  draw  the  contract  in  such  a  manner 
that  the  bonds  will  sell  for  the  highest  jjossible  price. 

The  second  consideration  is  that  property  which  is 
believed  to  assist  the  State  in  the  fulfilment  of  its 
public  functions  should  be  exempt  from  taxation.  In 
matters  of  taxation  the  legislator  is  obliged  to  rec- 
ognize the  actual  condition  of  public  opinion.  Whether 
this  public  opinion  rests  upon  a  satisfactory  basis  or 
not  the  fact  of  its  existence  controls  the  judgment  of 
the  legislator  who  desires  a  system  of  taxation  that 
will  work  smoothly  and  efficiently.  So  the  deep  seated 
prejudices  of  the  peoi^le  for  or  against  any  particular 
suggestion  will  ever  remain  an  important  considera- 
tion in  the  drafting  of  tax  laws. 

So  the  property  of  corporations  or  associations 
which  are  engaged  in  religious,  educational,  charitable, 
benevolent,  scientific,  patriotic,  or  historical  pur- 
poses" are  deemed  worthy  of  being  exempt  from  taxa- 
tion. But  there  should  be  this  limitation  that  only  the 
property  actually  used  for  these  purposes  should  be 
exempt,  Avhile  any  property  these  coi'porations  or  asso- 
ciations use  to  secure  a  revenue  from  should  be  sub- 
ject to  taxation. 

The  tliird  consideration  is  that  the  State  should  not 
tax  capital  regarded  as  essential  for  extending  the 
source  of  future  income.  The  State  is  not  limited  to 
the  getting  of  revenue,  but  it  is  obliged  to  get  revenue 
in  such  a  manner  that  the  source  from  which  it  is 
dei-ived  shall  never  be  exhausted.  The  legislator  must 
hold  in  mind  the  needs  of  the  future  as  well  as  of  the 
present,  and  should  employ  the  taxing  power  in  such  a 
manner  as  not  to  dry  up  the  springs  of  present  revenue 


186  Taxation  in  New  York 

or  to  hinder  the  development  of  an  enlarged  supply. 
The  life  of  the  State  is  conceived  to  be  eternal.  As  a 
matter  of  history,  states  do  come  to  an  end,  that  is  they 
are  born,  they  grow,  they  decay,  and  they  die.  An 
individual  must  recognize  the  fact  of  death  and  adjust 
his  affairs  accordingly.  But  with  the  State  it  is  dif- 
ferent, and  they  Avho  manage  its  affairs  should  do  so 
in  view  that  its  interests  endure  in  perpetuity.  There 
should  be  no  commutation  of  the  patrimony  of  the  State 
into  extraordinary  income  for  a  few  years.  A  sound 
system  of  taxation  will  not  impair  the  patrimony  of 
the  State. 

In  this  State  land  planted  with  trees  for  forestry 
purposes  is  exempt  from  taxation  for  a  period  of 
thirty-five  years.  Six  other  states  exempt  from  taxa- 
tion land  planted  with  trees  for  forestry  purposes  with 
varying  periods  from  ten  to  thirty  years.  Thirteen 
states  exempt  mechanic's  tools  from  taxation;  seven 
states  exempt  growing  crops ;  nine  states  exempt  irri- 
gating ditches  and  canals  wholly  or  in  part ;  and  one 
state  exempts  the  materials  to  be  used  in  shipbuilding. 
These  exemptions  can  only  be  defended  on  the  ground 
that  they  are  essential  for  extending  the  source  of  the 
State's  future  income. 

No  state  has  been  so  liberal  in  granting  exemptions 
from  taxation  as  has  New  York.  The  earliest  exemp- 
tions seem  to  have  been  for  clergymen.  In  an  act 
passed  March  2,  1779,  for  raising  a  tax  to  be  applied 
towards  the  public  exigencies  of  the  State,  ministers  of 
the  gospel  were  not  to  be  taxed  for  their  respective  sal- 
aries. Again  in  an  act  passed  March  25,  1783,  for  rais- 
ing by  tax  £42,100  ministers  of  the  gospel  were  not  to 
be  taxed  for  their  salaries. 

An  act  of  the  Legislature  passed  November  20, 
1781,  exempted  from  taxation  the  inhabitants  of  the 
Town  of  Rochester,  Ulster  County,  whose  buildings 
and  crops  had  been  destroyed  by  a  late  incursion  of 
the  enemy.     This  was  the  only  exemption  from  taxa- 


Exemptions  187 

tion  oil  account  of  an  Indian  massacre  during  the  Revo- 
lutionary War.  This  massacre  occurred  August  12, 
1781,  and  the  band  of  Tories  and  Indians  was  led  by  a 
Tory  by  the  name  of  Caldwell,  and  an  Indian  by  the 
name  of  Shanks  Ben.  The  old  stone  fort  at  Wawars- 
ing  bore  the  brunt  of  the  attack  and  the  whole  of  the 
upper  Rondout  valley  was  that  August  Sabbath 
destroyed  in  flames. 

An  act  of  the  Legislature  passed  Februaiy  13,  1789, 
exempted  from  taxation  sheep  to  the  number  of  fifty. 
Only  excess  sheep  over  fifty  in  number  belonging  to 
any  one  person  were  to  be  taxed. 

An  act  of  the  Legislature  passed  April  8,  1796, 
exempted  from  taxation  for  a  period  of  five  years  the 
Albany  glass  factory  and  everything  appertaining  in 
and  to  the  carrying  on  the  said  facton^  together  with 
the  buildings  of  the  workmen  about  the  same.  When 
this.  exem])tion  expired  in  1801  it  was  renewed  by  the 
Legislature  for  another  period  of  five  years  to  the 
successor  of  the  Albany  glass  factory,  the  Hamilton 
manufacturing  society. 

The  first  general  exemption  law  was  enacted  by  the 
Legislature  March  30,  1799.    It  read  as  follows: 

"  That  no  house  or  land  belonging  to  the  Ignited 
States,  or  to  the  people  of  this  State,  nor  any  church 
oi-  place  of  public  worship,  or  any  personal  iiro])erty 
belonging  to  any  ordained  minister  of  the  gospel,  nor 
any  college  or  an  incorporated  academy,  nor  any 
school  house,  court  house,  gaol,  alms  house  or  ])ro|)«'rty 
belonging  to  any  incorporated  library,  shall  l)e  taxed 
by  virtue  of  this  act. ' ' 

Also:  *'And  the  said  assessors  shall  also  ascertain 
according  to  the  best  evidence  they  can  obtain  and  set 
down  in  sucli  list  the  value  of  the  residue  of  tlie  per- 
sonal estate  of  every  person  residing  in  such  division 
or  assessment  district  exclusive  of  their  farming  uten- 
sils, arms  and  accoutrements  for  s(»rving  in  the  militia, 
tools  and  implements  of  their  respective  trades  and 


188  Taxation  in  New  York 

professions,  ships  and  vessels  and  their  cargo  em- 
ployed in  trade  and  commerce  out  of  this  State,  articles 
of  the  produce  of  any  of  the  United  States,  and  pur- 
chased for  exportation  or  sale." 

(xradually  year  after  year  new  exemptions  have  been 
created  until  to-day  they  cover  almost  every  institution 
or  class  of  property  which  may  alleviate  the  physical 
comfort,  appease  the  moral  hunger  or  add  to  the  men- 
tal satisfaction  of  man  from  the  cradle  to  the  grave. 

In  1917  the  exemptions  for  clergymen  amounted  to 
$1,829,474.  The  exemption  of  1799,  which  referred 
only  to  personal  property,  was  in  1801  extended  to 
include  both  real  estate  and  personal  property,  but  the 
exemption  was  limited  to  $1,500.  It  was  made  to 
include  priests  as  well  as  ministers  of  the  gospel.  As 
no  other  state  in  the  Union  exempts  clergymen  from 
taxation,  it  is  difficult  to  say  on  what  grounds  such  an 
exemption  is  justified.  Why  are  not  teachers,  doctors 
and  writers  entitled  to  a  like  exemption? 

There  is  a  possibility  that  the  Legislature  in  grant- 
ing an  exemption  to  clergymen  in  1799  was  influenced 
by  the  fact  that  the  act  of  1693  by  the  Colonial  Assem- 
bly establishing  the  Church  of  England  ministry  in 
the  City  of  Ncav  York  and  the  Counties  of  Queens, 
Eichmond  and  Westchester  and  providing  that  the 
clergA^men  of  this  church  should  be  paid  by  taxation 
had  been  abrogated  in  1784.  Section  39  of  the  consti- 
tution of  1777  read  as  follows : 

''  The  ministers  of  the  gospel  are,  by  their  profes- 
sion, dedicated  to  the  service  of  God  and  the  cure  of 
souls,  and  ought  not  to  be  diverted  from  the  great  duty 
of  their  function ;  therefore  no  minister  of  the  gospel, 
or  priest  of  any  denomination  whatsoever,  shall  at  any 
time  hereafter,  under  any  pretense  or  description 
whatsoever,  be  eligible  to  or  capable  of  holding  any 
civil  or  military  office  within  this  State." 

This  was  in  force  until  abrogated  by  the  constitution 
of  1846.    Thus  as  clergymen  were  unable  to  hold  office 


Exemptions  189 

and  the  salaries  of  a  large  portion  of  them  were  no 
longer  paid  by  taxation  the  legislators  may  have  con- 
cluded to  give  clergymen  a  $1,500  exemj^tion  as  a 
recompense. 

In  1917  the  exemptions  for  cemeteries  amounted  to 
$72,441,891.  Cemeteries  are  exempted  in  every  state 
in  the  Union,  yet  it  was  not  until  1875  that  New  York 
exempted  all  cemeteries  from  taxation.  There  were 
many  special  acts  exempting  separate  cemeteries  be- 
fore this  date,  some  of  which  were  the  Buffalo  burial 
ground  in  1834,  Greenwood  Cemetery  in  1838,  Pitts- 
ford  Cemetery  in  1843  and  Westfield  Cemetery  in 
1846.  Many  cemeteries  are  stock  corporations  which 
pay  di\ndends  to  stockholders  and  it  is  manifestly  un- 
fair that  such  cemeteries  should  be  exempt  from  taxa- 
tion. That  we  have  a  fitting  respect  for  our  dead  is 
evidenced  by  the  many  beautiful  and  well  kept  ceme- 
teries thruout  the  State. 

In  1917  the  exemptions  for  parsonages  amounted  to 
$7,091,465.  It  was  not  until  1892  that  parsonages  were 
exempted  from  taxation,  and  then  only  to  the  amount 
of  two  thousand  dollars.  This  limitation  is  practically 
a  dead  lett(  r  as  assessors  generally  exempt  parsonages 
to  the  full  extent  whether  the  value  is  ten  thousand 
dollars  or  more.  Nineteen  other  states  exempt  par- 
sonages from  taxation  wholly  or  in  part.  A  partial 
exemption  increases  the  difficulties  of  assessors.  Par- 
sonages should  be  wliolly  exempt  or  not  at  all. 

In  1840  the  Legislature  passed  a  law  authorizing  the 
taxation  and  sale  of  Indian  lands  without  any  reserva- 
tion of  the  rights  of  the  Indian  occupants.  The  courts 
held  this  law  unconstitutional  and  void  bv  virtue  of 
the  treaty  the  United  States  had  entered  into  with 
the  Indians.  The  statute  enacted  by  the  Legislature  in 
1841  authorizing  the  sale  of  Indian  lands  for  taxes,  but 
providing  that  such  sale  should  not  affect  the  Indian 
right  of  occupancy,  was  held  by  the  courts  to  be  valid 
as  against  the  obje.'tion  that  it  conflicts  with  the  treat- 


190  Taxation  in  New  York 

ies  of  the  United  States  guaranteeing  the  Indians 
free  use  and  enjoyment  of  their  lands,  since  it 
operated  only  against  the  pre-emption  rights  of  white 
purchasers.  The  first  law  exempting  Indian  reserva- 
tions from  taxation  was  passed  in  1859,  which  referred 
only  to  the  Seneca  Indians  on  the  Cattaraugus  reserva- 
tion. In  1875  it  was  extended  to  the  Tonawanda  In- 
dians on  the  Tonawanda  reservation,  and  in  1896  it 
was  made  to  include  all  Indians  on  reservations  in  the 
State.  No  law  w^as  necessary  to  exempt  Indians  from 
taxation  as  their  treaty  with  the  United  States  govern- 
ment exempted  them  from  taxation.  The  exemptions 
for  Indian  reservations  in  1917  amounted  to  $914,140. 

In  1859  agricultural  societies  having  lands  perma- 
nently used  for  show  grounds  are  first  made  exempt 
from  taxation.  Nineteen  other  states  exempt  agricul- 
tural societies  from  taxation.  The  intention  of  this 
is  to  encourage  agriculture,  but  it  is  doubtful  if  it  does 
to  any  appreciable  extent.  Most  agricultural  socie- 
ties at  their  annual  fairs  resort  to  racing,  pageants, 
parades  and  other  amusements  in  order  to  draw  large 
crowds  and  their  exhibitions  of  live  stock,  fruits  and 
vegetables  becomes  a  minor  consideration.  Even  then 
these  agricultural  societies  barely  exist  and  one  by  one 
they  are  going  out  of  existence.  In  time  this  exem])tion, 
which  amounted  to  $1,057,650  in  1917,  will  disappear. 

In  1857  the  Legislature  exempted  from  taxation 
deposits  in  savings  banks  and  the  accunmlations  in 
life  insurance  companies  so  far  as  the  accumulations 
were  held  for  the  exclusive  benefit  of  the  assured.  If 
there  is  to  be  any  justification  of  this  exeni))tion  it  must 
come  under  the  class:  The  State  should  not  tax  capital 
regarded  as  essential  for  extending  the  source  of  future 
income.     Some  states  tax  deposits  in  savings  banks. 

The  first  exemjotion  for  a  hospital  occurred  in  1875. 
It  exempted  the  real  and  ])ersonal  property  of  th<» 
Society  of  the  New  York  TTospital.  a  cl)avitnl)l('  corpo- 
ration  fi'om   which    no   revenue  was   derived.    It  was 


Exemptions  191 

not  until  1893  that  all  hospitals  in  the  State  received 
exemption  from  taxation.  The  justification  for  this 
exem23tion  must  come  under  the  second  class :  Proj)erty 
which  is  believed  to  assist  the  State  in  the  fulfilment  of 
its  public  functions  should  be  exempt  from  taxation. 
In  1917  the  hospital  exemptions  in  the  State  amounted 
to  $99,721,445,  and  included  general  hospitals  and  dis- 
pensaries, hospitals  for  the  insane,  tuberculosis  hos- 
pitals, hospitals  for  contagious  diseases,  hospitals  for 
convalescents,  maternity  hospitals,  hospitals  for  chil- 
dren, and  hospitals  for  special  diseases.  All  kinds  of 
human  ills  are  covered  by  this  list. 

A  special  act  of  the  Legislature  in  1886  exempted 
Warner's  Observatory  of  Rochester  from  taxation. 
This  was  before  there  was  a  general  exemption  of 
property  used  for  scientific  purposes.  Ten  years  later 
property  used  for  scientific  purposes  received  a  gen- 
eral exemption. 

Military  duty  early  came  in  for  attention  in  the  tax 
laws  of  the  State  and  in  1854  the  following  military 
exemptions  were  passed  by  the  Legislature  : 

"All  general  and  staff  officers,  all  field  officers,  and 
all  commissioned  and  non-commissioned  officers,  musi- 
cians and  privates  of  the  military  forces  of  the  State, 
shall  be  exempt  from  jury  duty  during  the  time  they 
shall  perform  military  duty,  and  from  the  pa^Tnent  of 
highway  taxes,  not  exceeding  six  days  in  any  one  year; 
and  every  such  person  not  assessed  for  highway  taxes 
shall  be  entitled  to  a  deduction  in  the  assessment  of 
his  real  and  personal  property,  to  the  amount  of  five  hun- 
dred dollars;  and  every  person  who  shall  have  served 
seven  A'ears,  and  shall  have  been  lionorably  discharged, 
as  required  by  this  section,  sliall  forever  after,  so  long 
as  he  remains  a  citizen  of  this  State,  be  exempt  from 
two  days'  highway  taxes  in  each  year ;  and  if  a  resident 
of  any  city  of  this  State,  he  shall  forever  be  entitled  to 
a  deduction  in  the  assessment  of  liis  real  and  personal 
property,  to  the  amount  of  five  hundred  dollars  each 
year  the  exemption  and  deduction  liereni  provided  for 


192  Taxation  in  New  Yobk 

to  be  allowed  only  on  the  production,  to  the  assessor  or 
assessors  of  the  town  or  ward  in  which  he  resides,  of 
a  certificate  from  the  commanding  officer  of  the  regi- 
ment in  which  he  last  served." 

The  next  year  the  Legislature  amended  this  act  by 
allowing  an  exemption  of  five  hundred  dollars  in  assess- 
ment of  property  to  every  officer,  non-commissioned 
officer,  musician  and  private  actually  and  faithfully 
serving  in  such  division ;  but  to  those  in  any  troop  of 
cavalry  or  company  of  light  artillery  an  exemption  of 
one  thousand  dollars  was  granted.  Why  were  cavalry- 
men and  artillerymen  granted  a  double  exemption  over 
infantrymen  ? 

In  1870  the  uniform,  arms,  and  equipments,  required 
by  law  or  regiilations,  of  every  officer,  non-commis- 
sioned officer,  musician  and  private  of  the  national 
guard  was  exempted  by  the  Legislature  from  all  suits, 
distresses,  executions  or  sales  for  debts,  or  for  the 
payment  of  taxes ;  and  every  mounted  officer,  and  every 
member  of  a  troop  of  cavalry  or  battery  of  artillery, 
who  owned  a  suitable  horse  necessary  for  his  use  as 
such  officer  or  member  was  granted  a  like  exemption. 
This  was  the  year  the  general  training  was  abolished 
of  all  citizens  not  members  of  the  national  guard  one 
day  each  year  on  the  first  Monday  in  September.  This 
exemption  may  have  been  prompted  on  the  part  of  the 
legislators  by  a  desire  to  induce  citizens  to  join  the 
national  guard. 

However  in  1875  all  these  military  exemptions  were 
repealed.  Being  a  time  of  profound  peace  and  a  feel- 
ing in  the  minds  of  the  vast  majority  that  there  would 
never  be  another  war,  all  distinctions  between  the 
military  and  civilian  were  thought  best  to  be  done 
away  with. 

One  cannot  but  be  impressed  by  the  numerous  peti- 
tions sent  to  the  Legislature  year  after  year  to  have 
firemen  exempted  from  taxation  in  the  days  when  the 
cities  did  not  have  paid  fire  departments.  There  was 
somcthino:  heroic  about  tlie  brave  firemen  wlio  fought 


Exemptions  193 

the  flames  without  pay  or  recompense  and  it  was 
thought  that  these  volunteer  tiremen  should  receive 
extra  consideration.  But  from  early  colonial  days 
when  the  citizens  of  New  Amsterdam  were  subject  to 
a  fine  of  twenty-five  gTiilders  for  neglect  to  sweep  a 
chimney  in  case  it  caught  fire,  so  it  is  felt  that  most 
fires  are  the  result  of  carelessness.  Perhaps  on  this 
account  or  because  paid  fire  departments  became  the 
rule  in  most  cities,  only  two  municipalities  of  the  State, 
Cortland  and  Watertowni,  have  by  special  act  of  the 
Legislature  exempted  firemen  from  taxation  to  the 
amount  of  five  hundred  dollars.  In  1879  the  Legis- 
lature granted  to  incorporated  villages  the  right  to 
exempt  members  of  fire  companies  from  taxation  to 
the  amount  of  five  hundred  dollars,  but  this  could  only 
be  done  by  a  vote  of  the  legal  electors  of  such  incor- 
porated village. 

That  volunteer  firemen  are  held  in  high  esteem  by 
their  fellow  citizens  is  evidenced  by  the  act  of  the 
Legislature  in  1891  when  the  real  property  of  any 
incorporated  association  of  present  or  former  volun- 
teer firemen,  actually  and  exclusively  used  and  occu- 
pied by  such  corporation,  and  not  exceeding  in  assessed 
value  the  sum  of  fifteen  thousand  dollars  was  exempted 
from  taxation.  At  present  this  refers  only  to  a  fire- 
men's home  at  Hudson,  where  aged  and  disabled  fire- 
men are  cared  for. 

The  Legislature  was  particularly  lenient  with  turn- 
pike, bridge  and  canal  companies.  An  act  of  1827 
exempted  these  companies  from  taxation  when  their 
net  income  did  not  exceed  five  per  cent,  of  their  capital 
stock.  This  act  was  amended  in  1854  so  that  turnpike 
companies  were  exempt  from  taxation  until  the  annual 
receipts  from  tolls  over  necessary  repairs  and  a  suit- 
able reserve  fund  exceeded  seven  per  cent,  on  the 
first  cost  of  the  road.  There  are  still  a  few  private 
bridge  companies,  but  turnpike  companies  have  dis- 
appeared from  the  State.  The  onlv  private  canal 
7 


1&4  Taxation  in  New  York 

company  was  the  Delaware  and  Hudson  Canal,  which 
was  abandoned  in  1899.  These  all  helped  in  the  early 
development  of  the  State  and  perhaps  the  Legislature 
was  justified  in  granting  them  exemptions. 

The  Legislature  was  particularly  liberal  in  the  early 
days  to  the  manufacturing  industry.  On  February  18, 
1817,  it  exempted  all  cotton,  woolen  and  linen  manufac- 
turing companies  in  the  State  as  follows : 

'  *  That  from  and  after  the  passing  of  this  act,  all  the 
buildings,  machinery  and  the  manufactured  articles  in 
the  hands  of  the  manufacturer,  of  any  cotton,  woolen  or 
linen  manufactory  erected  within  this  State,  or  here- 
after to  be  erected  shall  be  exempted  from  taxation 
within  this  State ;  and  that  all  manufacturers  employed 
in  any  cotton,  woolen  or  linen  manufactory,  shall  be 
and  hereby  are  exempted  from  all  militia  duty,  except 
in  cases  of  invasion  or  insurrection,  or  when  the  coun- 
try shall  be  in  danger  of  invasion,  and  from  serving  as 
jurors,  in  all  suits  to  be  brought  for  the  recovery  of 
debts  to  the  value  of  twenty-five  dollars  or  under." 

This  law  was  repealed  in  1823. 

In  1823  houses  of  industry  were  exempted  from  taxa- 
tion. Then  in  1829  literary  and  charitable  institutions 
became  exempt  for  the  first  time.  But  in  1893  the 
doors  were  opened  wide  for  nearly  every  kind  of  insti- 
tution when  subdivision  seven  of  section  four  of  the 
tax  law  was  made  to  read  in  part  as  follows : 

''  The  real  property  of  a  corporation  or  association 
organized  exclusively  for  the  moral  or  mental  improve- 
ment of  men  and  women,  or  for  religious,  charitable, 
missionary,  hospital,  educational,  patriotic,  historical 
or  cemetery  purposes  shall  be  exempt  from  taxation." 
This  was  not  broad  enough  to  suit  the  exemption  peo- 
ple so  in  1896  it  was  amended  to  include  bible,  tract, 
benevolent,  infirmary,  scientific,  literary,  library,  and 
societies  for  the  enforcement  of  laws  relating  to 
children  and  animals. 

In  1884  co-operative  life  and  casualty  insurance  com- 
panies were  exempted  from  taxation.     There  is  no 


Exemptions  195 

justification  for  such  an  exemption.  It  is  only  one 
more  of  an  already  too  long  list. 

In  1879  historical  societies  were  authorized  to  have 
and  hold  for  the  purpose  of  inclosure,  preservation  and 
the  erection  of  monuments,  but  under  no  circumstances 
for  the  purposes  of  business,  the  sites  of  old  forts  and 
battles,  not  to  exceed  six  acres  in  one  locality,  and 
when  such  sites  have  been  so  appropriated  and 
improved  and  used  for  such  purposes  only,  they  were  to 
be  exempted  from  taxation.  No  exemptions  are  being 
made  in  the  State  under  this  special  law  of  1879.  It 
was  passed  nearly  one  hundred  years  after  the  close 
of  the  Revolutionary  War  when  there  was  being  mani- 
fest a  reawakened  interest  in  battlefields  and  forts  con- 
nected with  the  Revolutionary  War.  A  private  asso- 
ciation was  striving  to  erect  a  suitable  monument  to 
commemorate  the  Battle  of  Saratoga  by  private  sub- 
scription. While  the  monument  has  been  erected  it 
was  found  to  be  too  much  for  the  private  association 
and  the  work  was  finally  completed  by  the  State. 

It  was  not  until  1881  that  all  new  bonds  issued  by 
counties,  cities,  towns  and  villages  were  exempted  from 
taxation.  As  explained  on  a  previous  page  when  the 
government  issues  bonds  it  is  usually  in  pressing  need 
of  funds  and  so  by  exempting  the  bonds  from  taxation 
they  sell  more  readily  and  will  also  bring  a  higher 
price.  It  was  not  until  Chapter  97  of  the  laAvs  of 
1917  was  enacted  that  school  bonds  received  an 
exemption  from  taxation.  This  chapter  reads  as  fol- 
lows :  **  Bonds  of  this  State  or  any  civil  division  thereof 
are  exempt  from  taxation.^'  Scliool  bonds  are  issued 
principally  for  the  construction  of  now  school  build- 
ings and  there  ought  to  be  every  encouragement  to  the 
replacement  of  outworn  structures  by  modern  up-to- 
date  school  buildings.  There  ought  not  to  have  been  a 
wait  of  thirty-six  years  before  school  bonds  received 
the  same  exemption  accorded  to  other  governmental 
bonds. 

When  the  Court  of  Appeals  decided  in  1876  in  the 
Pacific  Mail  Steamship  Company  case  that  domestic 


196  Taxation  in  New  Yoek 

vessels  registered  in  the  State  were  taxable  even  tho 
the  vessels  themselves  were  outside  of  the  State  the 
Legislature  was  appealed  to  and  in  1881  it  exempted 
for  a  period  of  fifteen  years  such  vessels  and  also  the 
capital  stock,  franchises  and  earnings  of  corporations 
or  associations  operating  such  vessels.  In  1892  this 
exemption  was  extended  for  a  further  period  of  thirty 
years.  This  exemption  will  expire  in  1922.  Before  its 
expiration  it  will  probably  be  extended  for  another 
period  of  time.  What  justification  is  there  for  such  an 
exemption  1 

It  was  not  until  1897  that  property  purchased  with 
pension  money  was  exempted  by  statute  from  taxation. 
This  act  of  the  Legislature  was  caused  by  a  decision 
of  the  Court  of  Appeals  in  1890  exempting  property 
purchased  with  pension  money  from  taxation  on  the 
ground  that  it  was  exempt  from  execution.  This  is  not 
a  total  exemption,  for  such  property  is  to  be  assessed . 
for  highway  and  school  purposes.  That  this  property 
is  taxed  for  some  purposes  and  exempted  for  other  pur- 
poses causes  confusion  and  trouble.  It  should  be 
entirely  exempted  or  else  taxed  for  all  purposes.  The 
exemption  coming  so  late  in  the  history  of  the  State  has 
been  of  service  only  to  veterans  of  the  Civil  War.  In 
the  early  days  when  people  were  imprisoned  for  debt 
the  veterans  of  the  Eevolutionary  War  were  thankful 
to  have  an  exemption  passed  by  the  Legislature  which 
prevented  their  imprisonment  for  debt.  If  there  ever 
was  a  worthy  exemption  this  act  passed  by  the  Legisla- 
ture in  1830  preventing  the  imprisonment  for  debt  of 
those  who  fought  for  American  independence  certainly 
was  one. 

Anyone  studying  the  history  of  these  various  exemp- 
tions cannot  but  be  impressed  with  the  fact  that  there 
has  been  a  great  abuse  in  the  granting  of  exemptions 
in  this  State.  These  countless  exemptions  add  to  the 
burden  of  taxation  to  those  who  are  bearing  the 
expenses  of  government.  In  the  future  there  should  be 
no  extension  of  exemptions  to  any  other  classes. 


CHAPTER  XIII 
SPECIAL  ASSESSMENTS 

Special  assessments  are  general  proportional  con- 
tributions of  wealth  levied  against  real  estate  and  col- 
lected from  its  owners  and  occupants  to  defray  the 
costs  of  specified  public  improvements  made,  or  of 
specified  public  services  undertaken,  in  the  interest  of 
the  general  public.  Instead  of  making  the  general  pub- 
lic pay  for  these  improvements  and  services  the  cost  is 
placed  upon  the  already  overburdened  real  estate 
owners. 

Special  assessments,  like  taxes,  are  levied  and  col- 
lected under  the  sovereign  powers  of  the  State,  gen- 
erally called  taxing  and  police  powers,  but  under  very 
different  conditions  and  subject  to  the  application  of 
widely  different  principles  as  may  be  noted  from  the 
following  comparisons  based  upon  court  decisions : 

Taxes  upon  property  are  levied  for  the  purpose  of 
raising  revenue  for  meeting  the  general  costs  of  gov- 
ernment, for  providing  for  all  general  public  needs,  and 
for  other  governmental  purposes ;  and  the  only  benefit 
which  taxpayers  receive  is  as  members  of  organized 
society.  The  individual  taxpayer  is  therefore  poorer 
in  a  sense  by  reason  of  the  payment.  Special  assess- 
ments are  levied  only  for  the  purpose  of  providing  for 
specified  general  public  needs,  and  in  theory  at  least 
they  are  supposed  not  to  leave  the  property  owners 
who  pay  their  assessments  any  poorer,  on  account  of 
so-called  benefits  conferred  upon  them  by  the  improve- 
ments or  by  the  services  for  which  the  assessments  are 
levied. 

Taxes  may  be  levied  upon  personal  as  well  as  real 
estate,  and  upon  person,  business,  occupation,  fran- 
chise, privilege,  and  right ;  but  special  assessments  are 
levied  upon  real  estate  alone. 

[1071 


198  Taxation  in  New  Yoek 

A  tax  is  levied  on  the  whole,  or  with  reference  to  the 
whole,  of  a  known  political  subdivision,  as  a  state, 
county,  city,  town,  or  school  district,  or  of  some  special 
subdivision  thereof  or  some  special  class  of  property 
therein,  while  a  special  assessment  is  levied  on  the 
property  situated  in  a  district  created  for  the  express 
purpose  of  a  levy,  and  possessing  no  other  function  or 
even  existence  than  to  include  the  thing  upon  which  the 
levy  is  made. 

Certain  properties  may  be  specifically  exempted 
from  property  taxes  on  account  of  their  public  charac- 
ter or  from  considerations  of  public  policy,  but  no 
property  is  thus  exempt  from  special  assessments. 

Taxes  are  a  continuing  burden  of  recurrent  charges 
which  must  be  collected  at  stated  short  intervals,  while 
special  assessments  are  exceptional  both  as  to  time  and 
locality. 

The  method  of  special  assessments  was  first  intro- 
duced in  the  Dutch  colony  of  New  Netherland  in  1657 
for  the  paving  of  Brouwer  Straate,  now  Stone  Street, 
which  was  the  first  street  paved  in  New  Amsterdam. 
On  petition  of  the  owners  who  agreed  to  pay  the  cost, 
the  work  was  done  by  two  overseers  appointed  by  the 
city,  who  were  authorized  to  assess  proportionally  for 
the  expense  incurred  each  house  standing  in  the  afore- 
said street.  Taxation  was  of  a  rather  voluntary  char- 
acter in  New  Netherland  in  the  early  days  and  this 
first  application  of  special  assessments  worked  fairly 
well.  The  second  application  of  special  assessments  in 
the  colony  was  not  so  successful.  About  165i9  it  was 
decided  to  plank  the  sides  of  the  Heere  Gracht  or  Grand 
Canal  and  in  1660  the  means  of  payment  for  this  public 
improvement  costing  2,792  florins  was  the  cause  of  not 
a  little  embarrassment.  The  city  authorities  decided  to 
assess  the  abutting  lots  at  the  rate  of  forty  florins  per 
rod.  In  this  case  there  had  been  no  petition  of  the 
property  owners  offering  to  bear  the  expense,  indeed, 
they  were  apparently  not  even  warned  that  it  would  be 


Special  Assessments  199 

laid  upon  tliem.  Accordingly  there  was  a  great  outcry 
when  the  attempt  was  made  to  collect  the  assessment. 
Poor  Hendrick  Willemsen,  the  baker,  whose  assessment 
of  214  florins  and  17  stivers  was  the  highest  of  all, 
declared  that  he  had  not  only  received  no  benefit  from 
the  work,  but  had  actually  lost  a  lot  of  valuable  stone 
which  had  been  undermined.  He  vowed  he  would  not 
pay  and  only  after  he  had  been  conveyed  to  the  prison 
chamber  for  an  hour  or  two  was  he  frightened  into 
agreeing  to  contribute  the  amount  due  in  four  install- 
ments. The  privilege  of  defraying  their  assessments 
in  installments  was  later  given  to  all  who  chose  to  ask 
for  it. 

How^ever  unjust  the  system  of  special  assessments 
was  it  continued  to  grow  and  was  often  used  during  the 
English  occupation  down  to  the  time  of  the  Revolution- 
ary War.  Pennsylvania  appears  to  have  been  the  only 
other  colony  which  made  use  of  special  assessments 
during  this  early  period.  The  system  has  spread  thru- 
out  the  country  so  that  to-day  New  Hampshire  is  the 
only  state  in  which  no  special  assessments  are  levied 
for  public  improvements. 

New  York  as  a  state  has  never  levied  any  special 
assessments.  When  the  Erie  Canal  was  about  to  be 
undertaken  it  was  proposed  that  the  counties  adjoining 
the  canal  should  bear  part  of  the  expense  thru  direct 
taxation  as  it  was  contended  that  these  counties  would 
receive  the  most  benefit.  The  matter  was  several  times 
brought  up  in  the  Legislature,  but  nothing  ever  was 
done  about  it,  and  so  the  first  attempt  of  the  State- 
government  to  ley\'  a  special  assessment  failed. 

At  first  special  assessments  were  levied  under  the 
police  power  of  the  municipality.  The  property  o"v\Tier 
was  required  to  grade  or  drain  his  lot  or  to  lay  a  side- 
walk in  front  of  it,  and  in  case  of  failure  to  do  so,  the 
work  was  done  by  the  municipal  authorities  who  caused 
the  expense  to  be  assessed  upon  the  party  benefitted. 
The  application  of  this  theory  wns  limited  in  its  scope. 
As  special  assessments  were  pushed  forward  into  new 


200  Taxation  in  New  York 

directions,  a  broader  basis  than  the  police  power 
became  necessary  for  its  support.  This  was  the  power 
of  eminent  domain,  which  was  developed  out  of  the 
process  of  opening  new  streets.  It  was  said  that  every 
new  thorofare  greatly  enhanced  the  value  of  the 
abutting  property.  Under  the  power  of  eminent 
domain  compensation  is  made  for  the  injury  inflicted 
when  private  property  is  taken  for  public  use ;  but  in 
special  assessments  the  contention  was  advanced  that 
the  property  owner  was  not  damaged,  but  in  fact  was 
benefitted.  This  theory  of  justifying  special  assess- 
ments on  the  ground  of  eminent  domain  soon 
encountered  insurmountable  obstacles.  How  was  it  to 
be  justified  when  no  real  estate  was  taken  such  as  grad- 
ing, paving,  parking,  etc.  The  whole  system  of  special 
assessments  was  on  the  verge  of  destruction  when  a 
court  decision  in  1851  swept  away  all  these  attempted 
justifications  and  decided  that  special  assessments  were 
a  constitutional  exercise  of  the  taxing  power.  In  that 
decision  Judge  Charles  H.  Ruggles  said : 

"  The  people  have  not  ordained  that  taxation  shall 
be  general  so  as  to  embrace  all  persons  or  all  taxable 
persons  within  the  State  or  within  any  district  or  ter- 
ritorial division  of  the  State ;  nor  that  it  shall  or  shall 
not  be  numerically  equal  as  in  the  case  of  a  capitation 
tax;  nor  that  it  must  be  in  the  ratio  of  the  value  of 
each  man's  land,  or  of  his  goods,  or  of  both  combined; 
nor  that  a  tax  must  be  co-extensive  with  the  district  or 
upon  all  the  property  in  a  district  which  has  the  char- 
acter of  and  is  known  to  the  law  as  a  local  sovereignty ; 
nor  have  they  ordained  or  forbidden  that  a  tax  shall  be 
apportioned  according  to  the  benefit  which  each  tax- 
payer is  supposed  to  receive  from  the  object  on  which 
the  tax  is  expended.  In  all  these  particulars  the  power 
of  taxation  is  unrestrained." 

Special  assessments  did  not  become  established  in 
this  State  without  vigorous  opposition.  When  the  con- 
stitutional convention  of  1846  met  there  was  an  element 
among  the  delegates  hostile  to  the  system  of  special 


Special  Assessments  201 

assessments.  A  proposition  was  advanced  which  if 
incorporated  into  the  constitution  would  have  made  an 
end  to  special  assessments  then  and  there.  It  read  as 
follows : 

''  No  assessment  for  any  improvement  in  any  city  or 
village  shall  be  laid  otherwise  than  by  general  tax  upon 
the  taxable  property  of  such  city  or  village,  levied  and 
collected  with  an  annual  tax  for  other  expenses." 

The  advocates  of  this  proposition  contended  that 
special  assessments  for  any  public  improvement  were 
unsound  in  principle  because  it  substituted  an  arbitrary 
instead  of  a  fixed  rule  of  taxation.  They  insisted  that 
special  assessments  were  taxation,  and  taxation  to  be 
just  should  be  equal.  No  public  improvements  they 
said  could  be  made  without  being  of  special  advan- 
tage to  some  locality ;  consequently  the  assumption  that 
there  is,  in  particular  instances,  a  special  local  benefit 
is  false.  But  this  proposition  Avas  defeated  in  the 
convention  and  special  assessments  received  a  new 
lease  of  life.  The  only  explanation  that  can  be  given 
for  this  defeat  was  the  desire  to  shift  on  to  someone 
else  the  burden  of  supporting  local  government.  It  is 
reasonably  certain  that  if  the  real  estate  people  of  the 
cities  and  villages  had  been  well  organized  at  this  time 
special  assessments  would  have  received  its  death  blow. 
However,  all  honor  is  due  to  the  delegates  who  made 
this  heroic  but  losing  fight. 

While  the  courts  have  assisted  in  upholding  and 
extending  special  assessments  the  system  was  severely 
condemned  by  Chief  Justice  Sanford  Elias  Church  of 
the  Court  of  Appeals  in  1877  in  a  dissenting  opinion  in 
the  case  of  William  A.  Guest  against  the  City  of 
Brooklyn  in  which  Judge  Church  spoke  as  follows : 

''The  few  are  poAverless  against  the  legislative 
encroachments  of  the  many.  .  .  .  The  majoritv  are 
never  baclavard  in  consenting  to,  and  even  demanding 
improvements  which  they  may  enjoy  without  expense 
to  themselves.    The  inevitable  consequence  is,  to  induce 


202  Taxation  in  New  York 

improvements  in  advance  of  public  necessity,  to  cause 
extravagent  expenditures,  fraudulent  practices  and 
ruinous  taxation.  The  system  operates  unequally  and 
unjustly,  and  leads  to  oppression  and  confiscation.  It 
is  difficult  to  discover  in  it  a  single  redeeming  feature 
which  ought  to  commend  it  to  public  favor.  . 
Among  the  manifold  evils  complained  of  in  municipal 
administration,  there  is  no  one,  in  my  judgment,  calling 
more  loudly  for  reform  than  this  arbitrary  system  of 
special  assessments." 

Judge  Church  also  said  the  right  to  make  a  public 
street  or  avenue  is  based  upon  a  public  necessity  and 
the  public  should  pay  for  it. 

Much  of  Judge  Church's  criticism  was  true  of  New 
York  City  during  the  Tweed  regime  or  its  immediate 
successors.  The  City  of  New  York  had  levied  $9,071,- 
406  in  special  assessments  in  1869  when  the  city's 
expenditures  were  $13,045,614  and  $9,772,509  in  special 
assessments  in  1870  when  the  city's  expenditures  were 
$13,869,643.  Public  works  had  been  carried  on  upon 
a  scale  of  audacious  extravagance,  and  in  sections  of 
the  city  where  they  were  not  at  the  time  justified. 
Streets  had  been  laid  out  and  improved  principally 
to  give  fat  jobs  to  favorite  contractors,  and  great 
avenues  had  been  constructed  to  provide  fine  drives 
for  the  pleasure  and  convenience  of  other  people 
rather  than  the  abutting  property  owners.  Something 
of  the  same  kind  had  happened  during  this  period  in 
Brooklyn.  The  City  had  been  induced  to  undertake 
extravagant  and  wholly  unnecessary  public  works  at 
the  expense  of  the  parties  specially  interested.  Streets 
were  opened  and  paved  thru  the  supposed  suburban 
districts,  which  as  yet  were  nothing  more  than 
unbroken  meadows.  The  expectation  that  these 
improvements  would  at  once  transform  unoccupied 
tracts  of  land  into  desirable  residence  property  was 
doomed  to  disappointment.  Instead  the  property 
diminished  in  value;  the  interest  charges  and  arrears 


Special  Assessments  203 

upon  the  deferred  installments  kept  mounting  liigher 
and  liigher,  and  often  frequently  exceeded  in  value 
the  property  assessed,  so  that  it  made  it  to  the  interest 
of  the  property  owners  to  release  all  title  of  ownersliip 
rather  than  to  pay  their  special  assessments. 

A  special  report  of  the  City  Controller  of  Brooklyn 
in  1880  on  ''  Arrearages  for  Assessments  for  General 
and  Special  Improvements"  went  into  this  subject  in 
quite  some  detail.  In  utter  disregard  of  the  law 
which  prohibited  the  levying  of  special  assessments 
beyond  one-half  of  the  value  of  the  property  benefitted, 
as  many  as  eight  separate  and  distinct  levies  had  been 
made  upon  the  same  lots.  In  some  instances  one 
special  assessment  would  have  been  practical  confisca- 
tion. The  controller  cited  instances  where  lots  valued 
at  $200,  $400  and  $500  were  subject  to  special  assess- 
ments of  $884,  $1072  and  $3871,  respectively.  Con- 
tractors and  some  city  officials  became  rich  thru  this 
abuse  of  the  special  assessment  s^^stem  while  property 
owners  and  the  city  became  poor.  At  the  beginning  of 
1880  there  was  a  deficit  of  $2,645,227  from  special 
assessments  in  the  City  of  Brooklyn!.  In  New  York 
City  during  the  same  year  there  was  a  deficit  of 
$8,457,847. 

When  Central  Park  in  New  York  City  was  laid  out 
following  an  authorization  of  the  Legislature  in  July, 
1853,  over  seven  thousand  city  lots  were  taken  for  this 
purpose  and  the  owners  of  these  city  lots  were  awarded 
compensation  to  the  amount  of  a  little  over  five  million 
dollars.  But  the  property  abutting  on  this  new  park 
was  thought  to  have  been  benefitted  by  the  establish- 
ment of  Central  Park  and  so  it  was  made  subject  to  a 
special  assessment  of  $1,657,590.  This  special  assess- 
ment appears  not  to  have  created  much  hostility,  but 
sixty  years  later  when  the  dual  subway  system  was 
about  to  be  constructed  in  Greater  New  York  and  the 
rapid  transit  law  of  New  York  City  had  been  amended 
in  1911  to  make  use  of  special  assessments  for  the  con- 


204  Taxation  in  New  York 

struction  of  subways  there  was  too  much  opposition  on 
the  part  of  the  abutting  property  owners  to  attempt  to 
build  these  subways  by  the  system  of  special  assess- 
ments. The  abutting  property  owners  contended  that 
they  would  be  injured  and  not  benefitted  by  the  con- 
struction of  these  subways.  Their  contention  was  that 
the  outlying  sections  would  receive  the  benefit  and  not 
the  property  adjacent  to  the  subways. 

The  operation  of  special  assessments  generally 
extend  to  such  local  improvements  as  opening,  laying 
out,  grading,  paving  and  repaving,  planking  and  curb- 
ing streets,  constructing  sewers,  bettering  waterways, 
and  dredging  rivers..  The  application  of  special  assess- 
ments raises  difficult  questions.  It  is  obvious  that  the 
determination  of  the  proportional  benefits  enjoyed  by 
contiguous  property  on  the  one  hand  and  by  the  gen- 
eral public  on  the  other,  or  the  apportionment  of  the 
benefits  as  between  the  property  owners  in  the  district, 
cannot  be  determined  with  precision  and  can  at  best  be 
only  approximate.  In  fact  they  are  only  guessed  at- 
Thus  in  the  case  of  a  park  which  is  open  to  the  general 
public,  what  rule  can  determine  the  limits  of  the  dis- 
trict upon  which  the  cost  of  the  opening  the  park  shall 
be  charged  I  Thus  while  in  the  case  of  a  sewer  the  ter- 
ritory drained  may  be  a  natural  benefitted  district, 
what  rule  can  determine  with  any  degree  of  accuracy 
what  part  of  the  benefits  from  a  street  improvement 
inures  to  the  proprety  fronting  the  street,  what  part  to 
the  property  on  intersecting  streets,  and  what  part  to 
the  general  public  using  the  street?  It  not  infrequently 
happens  that  the  cost  of  a  paved  street  is  wholly  out  of 
proportion  to  the  value  of  the  abutting  property,  and 
the  improvement  is  demanded  solely  for  the  con- 
venience of  the  public. 

It  is  customary  for  the  board  of  assessors  to  deter- 
mine both  the  area  of  the  assessment  district  and  the 
extent  of  the  benefits  within  the  area.  For  their  guide 
in  determining  the  area,  the  law  lays  down  the  rule 


Special  Assessments  205 

that  it  should  include  all  lands  and  premises  deemed  to 
be  benefitted.  Within  the  assessment  district  the 
charge  is  apportioned  according  to  the  individual  bene- 
fit subject  to  the  limitation  that  the  charge  does  not 
exceed  the  benefit.  This  is  the  procedure  which  the 
letter  of  the  law  seems  to  prescribe.  The  board  of 
assessors,  however,  read  the  statute  more  liberally. 
What  they  in  fact  do,  is  this.  Where  the  district  as 
determined  includes  only  such  property  as  abuts  upon 
the  improvement  in  question  thej^  divide  the  cost  among 
those  chargeable  in  the  ratio  of  the  frontage  of  the 
property  assessed.  Should  the  district  include  lands 
not  within  this  rule,  the  various  parcels  are  laid  off 
into  strips  or  zones  in  accordance  with  their  compara- 
tive proximity  to  the  work.  The  board  proceeds  upon 
the  theory  that  the  degree  of  benefit  varies  inversely 
with  the  distance  from  the  line  of  the  improvement. 
The  abutting  property  is  then  assessed  at  so  much  per 
front  foot  or  per  square  foot,  the  next  nearest  zone  at  a 
less  rate  and  the  other  zones  proportionately. 

Formerly  the  abutting  property  owners  were  sub- 
ject in  advance  to  the  special  assessments  before  the 
improvements  were  made.  Frequently  the  first  assess- 
ment was  not  sufficient  to  complete  the  improvement 
and  there  would  be  a  reassessment.  This  always 
created  dissension,  so  that  it  is  now  customary  for  the 
municipality  to  make  the  improvement  first  and  levy 
the  assessment  afterwards.  Also  the  abutting  prop- 
erty owners  are  allowed  to  pay  their  special  assess- 
ments in  installments,  generally  ten  installments  or 
one  each  year. 

To  show  that  there  is  no  uniformity  in  the  systerp  of 
special  assessments  among  the  different  municipalities 
of  the  State  of  New  York  the  following  is  taken  from 
the  1917  United  States  census  bulletin,  ''  Specified 
Sources  of  Municipal  Eevenue  " : 

For  opening  streets,  Albany,  Binghamton,  Buffalo, 
Mount  Vernon,  Niagara  Falls,  Eochester,  Schenectady, 


206  Taxation  in  New  York 

Syracuse  and  Utica  assess  the  entire  cost  against  the 
property  supposed  to  be  benefitted;  New  York  City 
about  ninety-three  per  cent. ;  Poughkeepsie  about 
ninety  per  cent. ;  New  Rochelle  all  costs  in  excess  of 
five  thousand  dollars;  Amsterdam,  seventy-five  per 
cent. ;  and  Troy,  fifty  per  cent. 

Why  is  it  that  in  ten  cities  the  abutting  property 
owners  are  supposed  to  receive  all  the  benefits  arising 
from  the  opening  of  new  streets,  while  in  five  other 
cities  the  abutting  property  owners  are  supposed  to 
receive  varying  benefits  which  in  one  city  is  only  one- 
half? 

For  paving  streets,  Albany,  Buffalo,  Jamestown, 
Niagara  Falls,  Rochester,  Schenectady  and  Syracuse 
assess  against  abutting  property  the  entire  cost ;  New 
York  City  about  ninety-three  per  cent. ;  Mount  Vernon, 
New  Rochelle  and  Utica,  sixty-six  and  two-thirds  per 
cent.;  Poughkeepsie,  sixty  per  cent.;  Troy,  fifty  per 
cent.;  and  Elmira,  twenty  per  cent. 

By  what  logic  are  these  varying  benefits  determined? 
In  some  cities  snow  removal,  sidewalk  cleaning  and 
oiling  streets  are  done  by  special  assessments,  while 
in  other  cities  these  same  services  are  paid  for  by  gen- 
eral taxation.  The  whole  system  of  special  assess- 
ments is  illogical,  unequal  and  unjust. 

Closely  related  to  the  levying  of  special  assessments 
is  one  form  of  the  procedure  which  is  designated  by 
the  term  excess  condemnation.  For  the  opening  of 
new  streets,  widening  of  old  streets  or  the  creation  of 
parks  excess  condemnation  is  far  preferable  to  special 
assessments. 

In  1812  the  Legislature  granted  the  City  of  New  York 
in  its  street  and  park  opening  act  the  right  to  take 
more  land  than  is  needed  by  excess  condemnation  and 
then  the  sale  of  the  surplus  land  by  the  municipality. 
In  1850  the  Court  of  Appeals  held  that  surplus  land 
could  not  be  taken  by  a  rminicipality  without  the 
owner's  consent.  Thus  excess  condemnation  in  this 
State  came  to  an  untimely  end. 


Special  Assessments  207 

Sixty-one  years  later  New  York  held  a  constitu- 
tional referendum  on  excess  condemnation  and  altlio 
the  proposed  amendment  was  defeated  in  1911,  two 
years  later  the  people  adopted  such  an  amendment  per- 
mitting excess  condemnation.  In  1915  the  Legislature 
passed  a  law  empowering  the  City  of  New  .York  to 
exercise  this  power. 

There  are  three  main  reasons  for  granting  to  the 
city  power  to  condemn  more  land  than  is  needed  for 
the  actual  improvement  with  power  to  sell  or  lease  the 
surplus.     These  reasons  are : 

(a)  Control  of  land  adjacent  to  improvements. 

(b)  Re-plotting  of  remnants  and  irregular  building 
lots. 

(c)  Saving  in  expense  to  the  municipality  thru  sale 
of  abutting  property  at  increased  values  due  to  the 
improvement. 

CONTROL  OF  LAND  ADJACENT  TO  IMPROVEMENTS 

American  cities  have  been  hampered  in  effective 
city  plan  development  and  in  creating  dignified  and 
artistic  public  places  by  the  free  and  unrestricted  use 
of  abutting  property  by  private  owners.  Many  of  our 
finest  squares  and  parlrways  are  lined  with  stables, 
billboards,  shops,  factories,  gas  tanks,  saloons.  There 
is  no  orderly  architectural  arrangement.  Residences, 
shop,  stores,  factories  crowd  one  another  close.  This 
condition  has  decreased  property  values  and  the  attrac- 
tiveness of  public  places.  It  is  to  the  advantage  of  the 
private  owners  as  well  as  to  that  of  the  city  that  neigh- 
borhoods should  not  be  allowed  to  run  down,  that  our 
public  places  be  surrounded  by  buildings  in  keeping 
with  the  improvement. 

The  city  should  have  the  power  to  sell  or  lease  the 
excess  land  subject  to  suitable  restrictions.  The  con- 
venience and  enjoyment  of  the  community  should  take 
precedence  of  the  whim  of  the  private  owner.  We 
have  but  to  look  at  our  bridge  api^roaches,  our  small 


208  Taxation  in  New  York 

parks,  our  public  squares  and  places  to  realize  that 
successful  city  planning  requires  the  control  of  adja- 
cent property. 

Where  the  city  is  compelled  to  take  a  considerable 
portion  of  a  lot  or  building  it  has  to  pay  practically 
the  cost  of  the  entire  parcel  and  would  do  better  to 
acquire  the  fee  of  the  whole  plot  and  secure  the  benefit 
from  the  increased  value  of  the  remainder.  Excess 
condemnation  relieves  the  land  owners  from  the 
burdens  of  special  assessments,  but  accelerates  the 
city's  growth  and  prosperity  by  insuring  the  quick 
and  sure  development  of  its  thorofares.  The  advantage 
of  control  over  the  character  and  use  of  the  buildings 
fronting  on  an  improvement  also  justifies  excess  con- 
demnation. By  placing  suitable  restrictions  when 
reselling  the  surplus  land,  the  city  will  secure  harmony 
in  the  architectural  treatment  of  streets. 

RE'PLOTTINQ  OF   REMNANTS   AND   IRREGULAR 
BUILDING    LOTS 

New  York  City  furnishes  several  horrible  examples 
in  cutting  new  streets  thru  sections  already  built  up 
without  excess  condemnation.  Delancey  Street  in 
Manhattan  and  Flatbush  Avenue  Extension  in  Brook- 
lyn have  both  been  held  back  in  development  and  in  the 
increased  value  which  the  improvement  promised,  by 
the  small,  irregular,  odd-shaped  building  plots  which 
were  left.  These  are  in  many  cases  unsuited  to  proper 
building  unless  united  with  adjoining  properties  held 
by  other  owners.  The  public  loses  in  tax  value  and 
sightliness  and  the  private  owner  is  injured  because 
his  lot  is  not  available  for  suitable  development. 

A  glance  at  the  land  maps  of  any  city  showing  the 
lot  lines  after  new  streets  have  been  cut  thru,  is  proof 
conclusive  of  loss  and  waste  under  the  old  system. 
Excess  condemnation  would  leave  the  city  free  to  rear- 
range and  subdivide  the  land  fronting  the  improvement 
into  plots  of  the  size  and  shape  best  suited  to  the  pro- 
posed development. 


Special  Assessments  209 

SAVING  OF  EXPENSE  TO  THE  CITY  THRU  SALE  OF 
ABUTTING  PROPERTY  AT  INCREASED  VALUE 
DUE  TO  THE  IMPROVEMENTS 

While  the  necessity  for  excess  condemnation  rests 
mainly  upon  the  control  of  adjacent  land  and  the 
replotting  of  remnants,  a  substantial  saving  of  dollars 
and  cents  will  result  in  some  instances.  It  must  not 
be  assumed  that  excess  condemnation  will  in  all  cases 
bring  revenue  to  the  city  or  reduce  the  cost  of  public 
improvements.  Sometimes  excess  condemnation  is 
justified  for  social  purposes  alone,  but  often  financial 
gain  to  the  city  will  also  result.  It  is  equitable  that  the 
increased  value  if  there  is  any  which  arises  solely  from 
the  enterprise  of  the  community  in  constructing  a 
boulevard  or  park  or  public  square  should  go  to  the 
city  and  not  to  those  who  are  fortunate  enough  to  own 
property  in  the  path  of  the  improvement.  If  the  cost 
of  public  improvements  is  reduced  the  city  will  be  bet- 
ter able  to  continue  its  efforts  for  a  rational  and  con- 
venient city  plan  without  too  great  a  financial  burden. 

To  illustrate  how  difficult  it  is  to  widen  a  street  under 
the  system  of  special  assessments  a  single  illustration 
of  Rivington  Street  in  Brooklyn  will  suffice.  In  1905 
this  street  was  widened  from  a  fifty  foot  street  to  a 
eighty  foot  street.  The  cost  of  this  was  $1,989,890  and 
one-quarter  of  the  cost  of  the  Avidening  of  the  street  was 
at  first  assessed  upon  the  local  property  owners.  But 
the  local  property  owners  protested  so  strongly  that 
the  Legislature  cancelled  the  assessment  and  the  cost  of 
the  entire  proceeding  was  paid  by  the  city.  Many  city 
streets  are  too  narrow  and  should  be  widened.  But  it 
is  almost  impossible  to  widen  them  by  the  system  of 
special  assessments.  By  using  excess  condemnation  a 
better  system  of  widening  streets  is  adopted. 

The  constitutional  amendment  adopted  by  the  State 
of  New  York  in  1913  limits  excess  condemnation  to 
streets  and  parks.  Ohio  adopted  a  constitutional 
amendment  in  1912  permitting  excess  condemnation 


210  Taxation  in  New  York 

and  in  this  state  excess  condemnation  is  not  restricted 
to  any  enumerated  list  of  public  improvements. 

Excess  condemnation  is  of  American  origin.  Eng- 
land did  not  adopt  it  until  1845,  France  until  1850, 
Italy  until  1865,  and  Belgium  until  1867.  In  these 
countries  it  has  been  used  largely  for  slum  demolition. 

In  1866  the  City  of  Glasgow  in  Scotland  acquired 
eighty-eight  acres  of  unsanitary  area  in  the  very  heart 
of  the  city  which  containel  fifty-one  thousand  persons. 
Thirty  new  streets  were  laid  out  and  twenty-six  old 
ones  were  widened.  A  large  park  was  also  plotted. 
The  improvement  did  not  demand  the  destruction  of 
all  buildings.  The  better  ones  were  not  torn  down  but 
thinned.  Sites  were  sold  to  private  builders  at  very 
low  prices,  and  finally  in  1899  the  city  began  to  build 
dwellings  on  its  own  responsibility.  The  purchase  and 
improvement  of  lands  and  buildings  have  cost  the  city 
ten  million  dollars,  and  the  new  buildings  constructed 
by  the  city  have  involved  a  further  expenditure  of  two 
million  dollars. 

In  1875  the  City  of  Birmingham  in  England  under- 
took a  scheme  embracing  an  area  of  ninety-three  acres 
and  a  population  of  16,596  persons.  Twelve  hundred 
houses  were  torn  down.  The  remaining  houses  were 
repaired  and  put  into  a  sanitary  condition  by  pro- 
viding systems  of  sewage  and  water  supply.  A  great 
thorofare,  Corporation  Street,  was  laid  out  thru  the 
unsanitary  area-  The  total  gross  cost  of  the  improve- 
ment was  $6,720,000  and  this  was  reduced  by  a  recoup- 
ment of  $3,970,000  for  buildin  glots  and  dwellings  sold 
by  the  city. 

Between  1876  and  1912  London  cleared  ninety-seven 
acres  in  thirty-five  schemes  displacing  45,437  persons. 
Of  these  44,891  were  re-housed.  The  gross  cost  of  the 
operations,  $16,769,580,  was  reduced  by  a  recoupment 
of  $4,616,375. 

Whether  demolitions  have  really  relieved  overcrowd- 
ing in  congested  districts  is  subject  to  the  gravest 


Special  Assessments  211 

doubt.  Usually  the  persons  dispossessed  from  the 
slum  area  moved  into  neighboring  buildings  on  the 
outskirts  of  the  cleared  area  and  filled  these  buildings 
to  overcrowding.  When  the  improvement  had  been 
completed,  and  new  structures  erected  on  the  demol- 
ished area,  the  dishoused  tenants  have  frequently  not 
returned  to  their  former  homes,  the  increased  rents  of 
the  new  premises  acting  as  a  deterrent.  Thus  in 
attempting  to  raze  plague  spots  the  local  authorities 
have  often  created  new  slums  contiguous  to  the  old 
slums. 


CHAPTER  XIV 
THE  FALLACY  OF  THE  SINGLE  TAX 

Contrary  to  general  belief  the  doctrine  of  raising  all 
revenue  for  public  purposes  by  a  tax  on  land  did  not 
originate  with  Henry  George,  the  author  of  * '  Progress 
and  Poverty."  This  doctrine  was  first  fully  conceived 
and  formulated  in  the  eighteenth  century  by  a  French 
school  called  the  Physiocrats.  Henry  George  himself 
recognized  this  and  dedicated  his  book,  *'  Protection 
and  Free  Trade,"  '*  To  the  memory  of  those  illustrious 
Frenchmen  of  a  century  ago,  Quesnay,  Turgot,  Mira- 
beau,  Condorcet,  Dupont,  and  their  fellows,  who  in  the 
night  of  despotism  foresaw  the  glories  of  the  coming 
day." 

Indirect  taxation  had  reached  its  height  in  Europe 
during  the  seventeenth  and  eighteenth  centuries. 
There  were  taxes  on  window  lights.  Taxes  on  chim- 
neys. Taxes  on  salt.  Everything  imaginable  was 
taxed.  As  a  reaction  against  this  system  of  indirect 
taxation  there  sprang  up  in  France  a  school  of  thinkers 
who  taught  that  land  is  the  only  source  of  new  wealth 
and  therefore  the  cultivation  of  the  soil  is  the  only 
really  productive  industry.  Agriculture  yields,  in 
addition  to  the  returns  on  labor  and  capital,  a  net 
product  which  is  called  rent.  Since  no  new  wealth  can 
come  from  any  other  source  all  taxes  must  of  necessity 
come  out  of  rent.  If  placed  on  other  things,  they  would 
be  simply  shifted  to  the  owner  of  the  land.  All  revenues 
should  therefore  be  raised  by  a  single  tax  on  the  rent 
of  land. 

This  school  of  thinkers  did  not  contend  that  private 
ownership  of  land  is  immoral  as  is  maintained  by 
Henry  George,  but  they  believed  that  whatever  entered 
as  an  element  of  cost  in  the  manufacturing  process, 
whether  it  be  taxes,  wages,  or  material,  must  come  out 

[2121 


The  Fallacy  of  the  Single  Tax  213 

of  the  net  product  of  agriculture.  They  advocated 
the  proposal  that  the  government  should  take  all  it 
needed  for  its  support  at  the  beginning  and  thus  relieve 
manufactures  and  commerce  from  all  subsequent 
demands.  They  assumed  that  the  source  of  payment 
was  the  same  in  either  case,  and  to  do  away  with  all 
the  excise  duties  and  business  taxes,  the  substitution 
of  a  single  tax  on  land  appealed  to  them  on  account  of 
its  simplicity  and  certainty. 

Voltaire  turned  his  caustic  pen  upon  this  system  of 
a  single  tax  on  land  and  wrote  his  celebrated  essay 
called  '*  The  Man  of  Forty  Crowns."  A  French  peas- 
ant, who  toils  laboriously  amid  conditions  of  unspeak- 
able distress,  succeeds  in  getting  from  the  soil  a  prod- 
uct equivalent  to  forty  croAvns.  When  the  tax  gatherer 
comes  along,  he  finds  that  the  peasant  can  manage  to 
keep  body  and  soul  together  on  twenty  crowns  and  so 
takes  away  for  the  expenses  of  the  government  the 
other  twenty  crowns.  An  acquaintance  of  the  peasant 
now  comes  along  in  his  six-horse  chariot.  Originally 
he  had  been  poor,  but  recently  he  had  been  left  a  for- 
tune of  four  hundred  thousand  crowns  a  year  in  money 
and  securities.  He  employs  six  lackeys  and  each 
receive  many  times  the  peasant's  income.  His  butler 
gets  two  thousand  crowns  salary  and  steals  twenty 
thousand.  As  he  stops  to  talk  with  the  peasant  he  is 
asked,'*  You  pay  of  course  half  your  income,  or  two 
hundred  thousand  crowns  to  the  government."  '*  You 
are  joking,  my  friend,"  answered  he,  "  I  am  no  landed 
proprietor  like  you.  The  tax  gatherer  would  be  an 
imbecile  to  assess  me;  for  everything  T  have  comes 
ultimately  from  the  land,,  and  somebody  has  paid  the 
tax  already.  To  make  me  pay  would  be  intolerable 
double  taxation.  Ta-ta,  my  friend;  you  just  pay  your 
single  tax,  enjoy  in  peace  your  clear  income  of  twenty 
crowns;  serve  your  country  well,  and  come  once  in  a 
while  to  take  dinner  with  my  lackey.  Yes,  yes,  the 
single  tax,  it  is  a  glorious  thing." 


214  Taxation  in  New  York 

To  Henry  George  belongs  the  credit  of  fully  work- 
ing out  the  single  tax  philosophy  in  its  economic  and 
social  aspects  and  of  stating  the  theory  in  an  effective 
form.  His  book,  "Progress  and  Poverty,"  was  finished 
in  1879.  The  single  tax  of  Henry  George  has  been 
advocated  with  fervor  and  devotion  not  merely  as  a 
business  proposition,  but  as  a  faith,  a  religion,  a  pious 
conviction.  A  cult  can  always  find  disciples  without 
number.  According  to  Henry  George  and  the  single 
taxers  the  single  tax  is  not  merely  a  tax,  but  a  plan 
of  reorganization  of  society  with  a  primary  view  of 
securing  a  more  equal  distribution  of  wealth  and  only 
incidentally  of  raising  revenues  for  the  government. 
Anti-poverty  societies  were  organized,  s^o  confident 
were  his  followers  that  the  single  tax  would  abolish 
poverty. 

The  single  tax  on  land  precludes  all  other  means  of 
raising  revenue  for  the  support  of  the  government  and 
so  custom  tariffs  must  be  abolished.  Henry  George 
was  a  free  trader  and  his  followers  to  be  consistent 
must  also  be  free  traders.  Income  taxes  must  be  abol- 
ished and  all  the  other  indirect  forms  of  raising 
revenue  discarded, 

Henry  George  claims  that  man  is  a  land  animal  and 
therefore  cannot  live  without  the  use  of  the  land,  and 
that  the  land  should  belong  to  all  of  the  people  because 
of  man  being  a  land  animal ;  that  man  can  no  more  live 
without  the  use  of  the  land  than  he  can  live  without  air 
and  water.  Therefore  land  should  be  free  as  air  and 
water.  All  will  agree  that  man  is  a  land  animal,  and 
that  he  can  not  subsist  without  the  products  of  the  soil 
any  more  than  he  could  live  without  free  access  of  air 
and  the  use  of  water.  But  that  is  no  argument  against 
the  private  ownership  of  land.  Mr.  George  says  that 
the  man  who  owns  the  land  under  our  present  system 
virtually  ovms  those  who  must  occupy  land.  He  fails 
to  recognize  that  man  is  a  social  as  well  as  a  land 
animal,  and  that  social  conditions  are  as  necessary  for 


The  Fallacy  of  the  Single  Tax  215 

man  in  a  state  of  society  a&  the  use  of  the  land  or  the 
air  and  the  water. 

For  the  sake  of  illustration  we  will  suppose  that  land 
is  the  hub  of  the  wheel  of  society.  Man  must  draw  his 
support  from  the  land ;  that  in  his  undeveloped  state  — 
in  his  tribal  state,  land  was  practically  the  only 
essential  to  his  well-being;  but  when  the  division  of 
labor  was  first  adopted,  then  social  progress  com- 
menced. It  was  when  man  evoluted  to  that  state  of 
intelligence  where  he  saw  that  a  division  of  labor  was 
better  for  his  well-being,  that  the  fisherman  said  to  the 
rude  boat-builder,  "  You  build  the  boats  and  I  will 
fish; "and  these  two  said  to  a  third,  ''  You  till  the  soil 
while  one  builds  the  boat  and  another  fishes. ' ' 

This  division  of  labor  continued  to  grow  as  man 
progressed  intellectually  and  socially.  The  growth  has 
been  long  and  continuous,  and  each  and  every  new 
invention  has  added  to  the  wants  of  man,  and  has  there- 
fore become  a  necessity  in  the  state  of  society  that  he 
now  exists  in.  The  greater  the  wants  of  society 
become  the  greater  becomes  the  division  of  labor. 

While  land  is  the  hub  of  the  wheel  of  society,  the 
various  articles  of  wearing  apparel,  the  many  thousand 
articles  of  value,  that  are  desired  by  the  individuals  of 
society,  form  the  other  portions  of  the  wheel.  Trans- 
portation facilities,  telephone  and  telegraph  systems, 
machinery  of  all  description  that  is  to-day  used,  great 
manufacturing  plants,  banks,  in  fact  the  whole  super- 
structure of  society  are  the  spokes,  the  felloes  and  tire 
of  the  wheel.  Man  in  a  state  of  society  is  just  as 
dependent  on  these  numerous  other  factors  which  have 
been  designated  the  spokes,  the  felloes  and  tire  of  the 
wheel,  as  he  is  on  land,  the  hub  of  the  wheel.  In  a  state 
of  savagery  the  hub,  or  the  land,  would  sup]^ly  the 
wants  of  man,  but  not  in  a  state  of  development.  So 
there  are  many  thousand  lines  of  pursuits  of  trade  and 
combinations  of  various  interests  that  may  be  pro- 
moted by  individuals,  tliat  can  be  of  more  liarm  to 
society  than  any  possible  monopoly  of  land. 


216  Taxation  in  New  Yoek 

Altho  Henry  George  and  his  followers  assert  that 
there  is  a  land  monopoly  in  this  country,  yet  as  a 
matter  of  fact  there  is  no  monopoly  of  land.  The 
majority  of  people  who  own  land  are  perfectly  willing 
to  let  it  go  for  a  fair  consideration.  At  the  hearings 
held  before  Mayor  John  Purroy  Mitchel's  committee 
of  twenty-seven  appointed  to  consider  new  sources  of 
revenue  for  New  York  City  the  single  taxers  made 
much  of  a  "  Not  for  Sale  "  sign  on  Astor  estate 
property  in  the  Bronx.  But  it  afterwards  developed  at 
these  hearings  that  this  sign  had  been  put  there  by  an 
auctioneer  who  had  a  large  auction  sale  of  three 
hundred  lots  adjoining  the  Astor  land.  Yet  notwith- 
standing the  sign  a  number  of  lots  were  sold  from  the 
Astor  estate  and  buildings  erected  thereon.  Louis  V. 
Bright,  President  of  the  Lawyers'  Title  and  Trust 
Company,  also  testified  at  these  hearings  that  to  his 
personal  knowledge  the  Astor  estate  had  sold  a  great 
deal  of  land  in  New  York  City  within  the  last  fifteen 
years. 

That  the  adoption  of  the  single  tax  on  land  values 
would  in  any  way  prevent  poverty  is  utterly  fallacious. 
If  you  divide  the  land  in  the  United  States  and  give 
each  individual  their  portion,  it  would  not  be  twenty- 
five  years  until  conditions  would  be  about  the  same 
as  they  are  to-day.  Those  who  wanted  to  experiment 
and  were  not  satisfied  with  the  tilling  of  the  soil  would 
sell  their  land.  One  would  Avant  to  go  into  a  grocery 
store  or  perhaps  he  would  want  to  go  into  the  automo- 
bile business.  Another  would  want  to  sell  his  land 
and  go  into  the  city  Avhere  he  could  wear  fine  clothes 
and  make  a  good  appearance,  at  least  while  his  money 
would  last.  Others  would  want  to  convert  their  land 
into  money  and  travel,  they  would  want  to  see  the 
sights  of  the  cities  and  perhaps  of  foreign  countries; 
and  so  on,  until  each  and  every  one  satisfied  to  the 
extent  of  their  ability  so  to  do,  their  curiosity,  their 
peculiar  desires,  their  peculiar  ideas,  etc.  Most  of 
them  would  prove  a  failure  in  the  enterprise  in  which 


The  Fallacy  of  the  Single  Tax  217 

they  embarked.  Ninety  per  cent  of  the  business  enter- 
prises undertaken  prove  failures.  So  in  the  end  these 
people  would  not  be  the  possessors  of  the  soil.  They 
would  have  spent  their  money.  Ninety  per  cent,  of 
their  undertakings  have  failed,  therefore  they  Avould 
be  in  what  is  called  the  working  classes.  This  would 
be  the  process  of  working  back  to  the  present  state  of 
affairs. 

Is  it  not  folly  to  argue  as  the  single  taxer  does  — 
that  improvidence,  bad  judgment,  ill  health,  intemper- 
ance, stupidity,  ignorance,  laziness,  dishonesty,  bad 
management,  physical  and  intellectual  delinquency, 
lack  of  foresight  and  other  imperfections  of  mind  and 
body,  can  be  overcome  and  righted  by  an  act  of  legis- 
lation? All  these  physical  and  mental  ailments  just 
recited  play  their  part  in  the  unequal  distribution  of 
wealth;  they  play  their  part  and  are  responsible  for 
the  many  sad  conditions  that  exist  in  society.  The 
single  taxers  would  have  you  believe  that  all  of  these 
ills  are  traceable  to  and  have  their  being  in  the  private 
ownership  of  land. 

We  must  expect  to  have  a  like  variation  in  the  pos- 
session of  property  as  long  as  we  have  such  various 
stages  of  intellectuality.  Whatever  legislation  that  is 
enacted  seeking  to  restrict  the  advancement  of  one 
because  others  are  unfortunate  and  cannot  keep  up 
mth  those  who  are  in  the  advance,  would  have  a 
tendency  to  hold  all  down  alike,  and  therefore  would 
destroy  all  ambition  to  advance.  The  lower  down  in 
the  scale  of  humanity  you  go,  the  nearer  you  come  to  an 
equality.  Everyone  would  like  to  see  the  ills  of  society 
abolished  were  it  possible.  Yet  even  here  we  should 
not  allow  our  emotion  and  our  sympathy  to  distort  and 
warp  our  judgment.  The  law  of  the  survival  of  the 
fittest  holds  good  in  all  mineral,  vegetable  and  animal 
creation. 

Henry  George  endeavored  to  figure  out  a  system 
that  would  make  all  men  equal.    But  in  so  doing  he 


218  Taxation  in  New  York 

failed  to  recognize  that  the  great  inequalities,  both 
social  and  financial,  are  very  largely  due  to  the  dif- 
ferences between  individuals,  and  not  that  the  pos- 
sessor of  vast  wealth  is  wiser  or  has  more  brains  than 
those  who  have  no  possession  whatever,  for  such  is  not 
the  case.  Philosophers  are  seldom  rich  men,  neither 
are  the  professors  of  our  universities.  The  great 
thinkers  of  our  age  are  not  rich  men.  These  men  have 
used  their  talents  for  the  acquisition  of  knowledge.  Is 
it  not  clear  that  no  process  of  taxation,  and  especially 
that  of  single  tax,  which  would  confiscate  all  private 
property  in  land,  thereby  destroying  the  very  founda- 
tion upon  which  civilization  has  advanced,  can  never 
bring  about  the  extirpation  of  pauperism  and  the 
equalization  of  the  distribution  of  wealth? 

Single  taxers  contend  that  tenancy  will  be  reduced 
by  the  application  of  the  single  tax  to  land  values,  but 
it  is  obvious  that  this  system  will  abolish  private  owner- 
ship of  land  and  make  of  all  the  people  mere  tenants 
of  the  government.  Let  us  quote  from  ' '  The  A.  B.  C. 
of  Single  Tax,"  written  by  Charles  B.  Fillebrown  of 
Boston.  * '  What  is  the  ethical  basis  of  the  single  tax? " 
' '  The  common  right  of  all  citizens  to  profit  by  values 
of  land  which  are  a  creation  of  the  community." 
''  Does  this  right  mean  the  nationalization  of  land?" 
''  No,  it  means  rather  the  socialization  of  economic 
rent."  *'  What  is  meant  by  the  term  socialization  of 
economic  rent?"  ''Gross  ground  rent  —  the  annual 
site  value  of  land,  i.  e.,  what  land  is  worth  annually  for 
use  per  annum  if  offered  in  the  open  market." 

Let  us  translate  the  above  into  a  concrete  example. 
If  a  tract  of  land  which  brings  in  a  net  return  of  five 
hundred  dollars  a  year,  which  according  to  Mr.  Fille- 
brown is  the  economic  rent  or  gross  ground  rent  or 
annual  site  value  of  the  tract  of  land,  and  society  or 
the  government  takes  this  five  hundred  dollars,  how 
much  interest  has  the  individual  property  owner  left 
in  that  tract  of  land?     True,  he  still  has  the  deed  or 


The  Fallacy  of  the  Single  Tax  219 

title,  but  what  good  is  it,  measured  in  dollars?  The 
individual  property  owner's  interest  in  that  tract  of 
land  is  going  to  decrase  just  in  proportion  as  the 
government's  interests  appear  in  the  form  of  taxes, 
which  is  the  plan  proposed  by  the  single  taxers  to  take 
the  eiconomic  rent.  Will  this  not  destroy  private 
ownership  of  land  and  transform  a  nation  of  land 
owners  to  a  nation  of  land  tenants  1 

It  is  hard  to  believe  that  a  nation  of  land  tenants 
would  be  for  the  best  interests  of  our  country.  There 
is  an  old  saying  that  ''  Rent  a  man  a  garden  and  he 
will  turn  it  into  a  desert,  but  give  a  man  a  desert  and  he 
will  make  of  it  a  garden."  In  every  quarter  of  the 
globe  where  land  tenantry  has  held  sway  but  little  or 
no  progress  has  been  made.  Private  oM^nership  of  land 
marks  the  first  step  in  social,  moral  and  mental 
progress.  It  is  the  first  mile  post  on  the  great  highway 
of  civilization.  The  pioneers  who  came  into  this  State 
in  the  early  days  when  it  was  one  great  wilderness, 
who  cleared  the  land  of  the  timber  and  underbrush,  who 
built  roads  and  bridges,  who  suffered  all  sorts  of  hard- 
ships and  privations  from  the  Indians  and  elements; 
did  they  do  this  to  become  a  race  of  tenants  or  a  race 
of  land  owners  ?  There  must  be  an  incentive,  a  reward, 
to  cause  people  to  undergo  these  things  and  that  incen- 
tive was  that  as  a  result  of  their  labors  they  would  o\\ti 
something,  own  some  land.  There  is  nothing  con- 
tributing to  the  uplift  of  humanity,  the  encouragement 
of  thrift,  and  the  moulding  of  a  vigorous  personality 
comparable  with  the  ownership  of  a  home. 

There  has  been  a  wonderful  development  of  our 
country  and  we  are  justly  proud  of  it,  but  without  this 
private  ownership  of  land  there  would  have  been  no 
such  development.  The  tenant,  a  mere  renter,  having 
no  interest  in  the  land,  other  than  what  his  wages 
would  amount  to,  would  never  have  done  what  these 
pioneer  land  owners  did  to  make  our  State  great. 
Tenantry  discourages  individuality,  and  any  law,  rule 
or  custom,  adopted  by  a  community,  state  or  nation. 


220  Taxation  in  New  York 

that  will  materially  affect  individual  unf oldment,  must 
in  time  bear  evidence  of  deterioration  in  that  com- 
munity, state  or  nation.  New  York  has  had  one 
experience  with  a  tenantry  that  resulted  in  the  anti- 
rent  troubles  of  the  forties  of  the  nineteenth  century, 
and  it  would  be  very  foolish  indeed,  to  repeat  that 
experience  upon  a  scale  of  greater  magnitude. 

Henry  George  and  his  school  of  followers  assert  that 
a  single  tax  on  land  or  land  values  as  they  designate 
it  cannot  be  shifted,  but  must  be  paid  by  the  land 
owner.  In  this  they  are  at  variance  with  another  school 
of  land  taxers  led  by  Isaac  Sherman,  who  contend 
that  a  single  tax  on  land  would  be  shifted  from  the  land 
owner  to  the  consumer  and  so  be  diffused  thruout  the 
community.  The  concensus  of  opinion  favors  the 
Henry  George  theory  that  a  single  tax  on  land  or  land 
values  would  stay  put  and  could  not  be  shifted. 

The  single  taxers  state  that  a  single  tax  on  land 
values  would  increase  production.  What  the  land 
needs  to  increase  production  is  more  fertilizers  and 
not  more  taxes.  The  farmers  will  agree  with  this  last 
statement. 

The  single  taxers  say  that  land  values  are  com- 
munity made  values  and  what  the  community  has  made 
the  community  is  entitled  to  and  these  should  not  go 
to  the  private  land  owner.  But  value  is  a  social  and 
not  an  individual  phenomenon.  Admitting  that  bare 
land  receives  its  value  thru  its  social  environment,  we 
must  also  admit  that  the  same  social  environment 
increases  the  demand  for  other  commodities  and  so 
brings  about  an  increase  in  value.  Take  a  newspaper 
for  instance.  When  published  in  a  desert  it  is  worth 
nothing;  when  published  in  a  town  it  is  worth  some- 
thing; but  when  published  in  a  city  it  receives  it  maxi- 
mum value.  Is  not  a  milk  route  more  valuable  in  a  city 
than  in  a  village  1  The  greater  the  demand  for  land 
the  greater  its  value,  but  the  same  is  true  of  everything 
else.     How  much  value  has  a  house  in  an  out  of  the 


The  Fallacy  of  the  Single  Tax  221 

way  place  where  there  is  no  demand  for  it  I  But  the 
same  house  placed  in  a  city  where  there  is  a  demand 
for  houses  would  have  considerable  value. 

But  land  values  do  not  always  or  necessarily 
increase.  The  single  taxers  pick  out  isolated  instances 
and  tell  us  that  twenty,  thirty  or  forty  years  ago  Mr. 
So  and  So  bought  a  piece  of  land  for  a  song,  a  town 
or  city  grew  up  around  it,  and  now  he  is  immensely 
wealthy  from  an  increased  value  of  his  land  which  the 
community  has  created.  But  where  there  is  one  case 
of  this  kind  there  are  hundreds  if  not  thousands  of 
cases  where  people  have  purchased  land  with  the 
expectation  of  a  rise  in  value,  but  it  has  not  risen  in 
value  and  after  paying  taxes  and  special  assessments 
for  a  period  of  years  they  have  lost  and  not  made  on 
their  investments. 

When  the  Rapid  Transit  Commission  of  New  York 
City  was  taking  testimony  in  March  1895,  one  of  -the 
witnesses  spoke  of  several  long  avenues  lined  with  the 
graves  of  property  owners.  What  did  he  mean?  Simply 
that  ten,  twenty  or  thirty  years  before  people  had 
invested  their  money  in  land  along  these  streets  in 
hopes  of  a  rise  in  value,  just  as  others  invest  their 
money  in  bonds  or  stocks  or  any  kind  of  securities.  The 
land  value  did  not  rise;  they  remained  stationary  or 
even  decreased  in  value.  Some  of  these  investors  were 
ruined  by  the  accumulated  taxes  and  special  assess- 
ments upon  their  non-productive  property. 

Cyrus  C.  Miller,  former  President  of  the  Bronx,  in 
testifying  before  Mayor  John  Purroy  MitchoPs  com- 
mittee of  twenty-seven  appointed  in  1914  to  investigate 
new  sources  of  city  revenue,  gave  an  illustration  of  a 
lot  m  Tremont  Avenue  in  the  Bronx,  which  the  owner 
bought  in  1872  for  $5,000.  In  1912  it  was  sold  for 
$30,000.  On  the  face  of  it  one  would  say  the  owner  had 
made  $25,000.  But  at  the  time  of  the  sale  the  unpaid 
taxes  and  special  assessments  amounted  to  $14,000. 
What  other  sums  he  paid  for  taxes,  special  assessments 


222  Taxation  in  New  York 

and  repairs  is  unknown,  but  supposing  them  to  have 
been  only  $14,000  and  remembering  that  his  original 
investment  of  $5,000  with  interest  for  forty  years 
amounted  to  $35,000  it  is  readily  seen  that  this  land 
owner  lost  at  least  $19,000,  for  his  total  investment 
amounted  to  $49,000  and  the  lot  sold  for  $30,000. 

History  tells  us  that  Peter  Minuit,  the  first  director 
general  of  the  Dutch  West  India  Companj^,  paid  to 
the  Indians  in  1626,  the  sum  of  sixty  guilders  or  about 
twenty-four  dollars  for  the  land  on  Manliattan  Island. 
In  1913  the  assessed  value  of  this  land  was  $3,155,389,- 
410,  but  when  we  figure  that  this  same  twenty-four  dol- 
lars if  put  out  at  the  prevailing  rates  of  interest  since 
1626,  would  amount  to  $12,884,901,824  in  round  num- 
bers, we  must  conclude  that  the  unearned  increment 
in  land  is  not  one-third  of  the  interest  on  capital. 

Land  made  the  Astor  millions  shout  the  single  tax- 
ers.  But  James  Parton  in  his  "  Life  of  John  Jacob 
Astor,"  published  in  1865,  says  that  John  Jacob  Astor 
was  a  very  wealthy  man  before  he  invested  any  money 
whatever  in  real  estate.  He  made  his  fortune  in  the 
fur  business  according  to  Mr.  Parton,  who  describes 
its  accumulation  as  follows : 

''At  that  day  the  fur  trade  was  exceedingly  profit- 
able, as  well  as  of  vast  extent.  It  is  estimated  that 
about  the  year  1800  the  number  of  peltries  annually 
furnished  to  commerce  was  about  six  millions,  varying 
in  value  from  fifteen  cents  to  five  hundred  dollars. 
When  every  respectable  man  in  Europe  and  America 
wore  a  beaver  skin  upon  his  head,  or  a  part  of  one, 
and  when  a  good  beaver  skin  could  be  bought  in  west- 
ern New  York  for  a  dollar's  worth  of  trash,  and  could 
be  sold  in  London  for  twenty-five  English  shillings, 
and  when  these  twenty-five  English  shillings  could  be 
invested  in  English  cloth  and  cutlery,  and  sold  in  New 
York  for  forty  shillings,  it  may  be  imagined  that  fur 
trading  was  a  very  good  business.  John  Jacob  Astor 
had  his  share  of  the  cream  of  it,  and  that  was  the  prin- 
cipal source  of  his  fortune." 


The  Fallacy  of  the  Single  Tax  223 

Mr.  Parton  also  says  that  John  Jacob  Astor  had 
great  faith  in  the  future  of  the  United  States  govern- 
ment and  that  during  the  War  of  1812  when  other 
wealthy  people  were  either  hesitating  or  refusing,  he 
invested  his  money  very  largely  in  government  bonds, 
thus  aiding  the  government  in  raising  money  for  the 
prosecution  of  the  war.  The  single  taxers  never  refer 
to  this  act  of  patriotism  on  the  part  of  John  Jacob 
Astor,  but  try  to  lead  people  to  believe  that  his  buying 
and  owning  real  estate  was  a  very  dishonorable  thing. 
Yet  when  John  Jacob  Astor  died  in  1848  he  left  $400,- 

000  for  the  founding  of  the  Astor  Library  in  New  York 
City. 

The  single  taxers  say  that  land  is  the  gift  of  God, 
but  that  everything  else  is  the  production  of  man's 
labor.  Let  us  analyz'e  this  statement.  Take,  for  exam- 
ple, the  workman  fashioning  a  chair.  The  wood  has  not 
been  produced  by  him;  it  is  the  gift  of  nature.  The 
tools  that  he  uses  are  the  result  of  the  contributions  of 
others,  the  house  in  which  he  works,  the  clothes  he 
wears,  the  food  he  eats,  and  all  of  these  are  necessary 
in  civilized  society  to  the  making  of  a  chair,  are  the 
results  of  the  contributions  of  the  community.  The 
chairmaker  's  safety  from  robbery  and  pillage  —  nay 
his  very  existence — is  dependent  on  the  ceaseless 
co-operation  of  the  society  about  him.  How  can  it  be 
said,  in  the  face  of  all  this,  that  his  owm  individual 
labor  wholly  creates  anything?  If  it  be  maintained 
that  he  pays  for  his  tools,  his  clothing  and  his  protec- 
tion, it  may  be  answered  that  the  land  owner  also  pays 
for  his  land. 

Is  it  not  clear  that  nothing  is  wholly  the  result  of 
unaided  individual  labor.  No  one  has  a  right  to  say: 
This  belongs  absolutely  and  completely  to  me,  because 

1  alone  have  produced  it.  The  socialists  <are  more 
logical  than  the  single  taxers,  for  they  deny  the  right 
of  the  individual  to  own  property  of  any  kind,  whether 
it  be  land  or  any  other  kind  of  property.    The  differ- 


224  Taxation  in  New  Yokk 

ence  between  property  in  land  and  property  in  other 
things  is  simply  one  of  degree  and  not  of  kind. 

The  single  taxers  contend  that  the  adoption  of  this 
system  would  prevent  speculation  in  land.  But  it  may 
be  asked,  is  speculation  in  land  any  worse  than  specu- 
lation in  stocks,  grain,  produce,  or  the  numerous  other 
things  speculated  in  by  man?  No  economist  would 
to-day  venture  to  deny  that  speculation  has  its  legiti- 
mate uses,  and  that  the  stock  and  produce  exchanges  of 
the  present  day  play  an  indispensable  part  in  the 
economy  of  our  complex  industrial  society.  Land 
speculation  is  but  a  small  part  of  man's  activities  in 
the  field  of  speculation.  Man's  life  and  all  his  activi- 
ties from  the  cradle  to  the  grave  are  speculative.  The 
groceryman  is  a  speculator.  He  buys  groceries  and 
then  tries  to  sell  them  to  the  consumer  at  an  advance 
over  what  he  paid  for  them.  He  has  not  produced 
anything,  yet  the  groceryman  is  a  necessary  factor  in 
our  civilization.  Anyone  who  takes  great  chances  is  a 
speculator.  Columbus  was  a  speculator,  so  too  was 
Washington,  Grant,  Lee,  and  in  fact  all  our  great  men. 
Then  why  condemn  the  land  speculator.  The  land 
speculator  takes  chances  that  no  other  man  takes. 
Many  of  them  sweat  blood  figuratively  speaking  by 
reason  of  the  chances  that  they  have  taken.  Some- 
times they  put  in  drains  and  sewers  and  fix  up  streets 
and  then  build  houses  for  the  purpose  of  renting  them 
or  selling  them.  They  ' '  hock  ' '  everything  they  have. 
They  seldom  own  a  cent.  Afterwards  they  often  find 
that  the  loan  is  called  in  and  they  are  wiped  out. 

Leonidas  and  his  brave  band  of  three  hundred 
defended  the  Pass  of  Thermopylae  against  the  mad 
rush  of  the  Persian  army.  They  took  great  chances 
and  they  lost,  and  their  speculative  exploits  are  immor- 
talized in  history.  But  the  land  speculators  who  take 
great  chances  and  also  lose  out  are  soon  forgotten. 
Thirty  years  ago  Pratt  and  Logan,  two  land  speculat- 
ors of  Albany  if  you  choose  to  call  them  that,  developed 
a  section  of  the  city  known  as  the  Pine  Hills.     They 


The  Fallacy  of  the  Single  Tax  225 

bought  land,  graded  and  paved  streets,  and  built 
houses.  They  took  great  chances  and  they  lost  all 
they  had.  But  to-day  Al'bany  owes  its  finest  residen- 
tional  section  to  the  speculation  of  Pratt  and  Logan. 

The  single  taxers  assert  that  the  adoption  of  this 
system  will  force  idle  land  held  for  speculative  pur- 
poses in  our  large  cities  into  the  market.  They  would 
have  us  believe  that  there  are  a  vast  number  of  vacant 
lots  and  unoccupied  land  in  every  city  that  ought  to  be 
developed,  but  from  which  the  owners  are  getting  rich 
paying  taxes  and  special  assessments  and  receiving  no 
income  from  whatever.  It  may  safely  be  affirmed  that 
south  of  Forty-second  Street  in  the  City  of  New  York 
—  the  home  of  the  major  part  of  the  tenement  house 
population  —  not  one-fiftieth  part  of  one  per  cent,  of 
the  building  lots  lie  idle,  and  of  these,  some  lots  are 
occupied  as  coal  yards,  and  some  adjoining  factories 
or  large  establishments  are  used  for  storage  purposes. 
According  to  the  1917  annual  report  of  the  department 
of  taxes  and  assessments  of  New  York  City  there  were 
93,383  separate  parcels  of  real  estate  assessed  in  the 
Boro  of  Manhattan  and  of  this  number  only  seven  per 
cent,  were  vacant. 

Land  owners  cannot  afford  to  let  their  land  lie  idle 
in  our  cities.  Statistics  show  that  unless  a  vacant  lot 
doubles  in  value  in  five  years '  time  the  owner  is  a  loser 
thru  the  payment  of  taxes  and  special  assessments  and 
the  interest  on  his  money  invested  in  the  lot.  The  lot 
is  lying  idle  simply  because  it  is  not  ripe  for  develop- 
ment. 

As  an  illustration  we  will  suppose  that  at  an  inter- 
section of  two  streets  in  one  of  our  cities  A,  B,  and  C 
own  corner  lots.  A  erects  a  building  on  liis  lot,  but 
B,  C,  and  D  do  not.  Now  the  single  taxers  tell  us  that 
B,  C,  and  D's  lots  increase  in  value  because  A  has 
developed  his  lot.  They  say  this  system  discourages 
the  man  of  thrift  and  enterprise,  and  offers  encourage- 
ment to  the  land  hog  and  dog-in-the-manger  individuals 

8 


226  Taxation  in  New  Yoek 

who  will  not  act  nor  allow  others  to  act.  Carrying  the 
illustration  further  we  find  that  A  has  had  difficulty  in 
securing  tenants  for  his  building  at  various  times  and 
this  was  not  due  from  asking  too  high  a  rental,  for  he 
has  based  his  rental  at  six  per  cent,  on  the  building.  It 
can  readily  be  seen  therefore  that  if  B,  C,  and  D  had 
erected  buildings  upon  their  lots  there  could  not  all 
of  these  buildings  been  rented.  As  a  matter  of  fact 
buildings  are  always  a  little  ahead  of  the  demand. 
The  fact  that  B,  C,  and  D  have  not  erected  buildings 
upon  their  lots  have  helped  A  to  keep  his  building 
rented.  More  than  that  B,  C,  and  D  have  helped  to  pay 
the  cost  of  the  street  grades,  sidewalks,  watermains, 
sewers  and  many  other  things  that  it  is  necessary  for 
A  to  have  in  order  to  keep  his  building  rented.  In 
addition  they  are  paying  their  general  property  taxes, 
which  pays  for  the  fire  and  police  protection  which  A's 
building  enjoys.  B,  C,  and  D  may  live  in  varions  sec- 
tions of  the  country  but  they  are  sending  their  hard 
earnings  to  this  city  to  pay  these  special  assessments 
and  general  taxes,  which  adds  to  the  city's  blood  of 
commerce,  making  for  greater  commercial  activity, 
which  in  turn  adds  to  the  rental  value  of  A's  building. 
A  city  cannot  grow  faster  than  its  trade  and  commer- 
cial relations  w^ill  justify.  The  single  taxers  would 
have  us  believe  that  we  have  but  to  build  houses  in  a 
city  and  they  w^ill  be  occupied  at  once.  As  the  popula- 
tion of  a  city  increases  more  buildings  will  be  required. 
But  you  cannot  increase  the  popula,tion  of  a  city  by 
simply  building  houses. 

The  single  taxers  contend  that  the  adoption  of  this 
system  will  be  of  great  benefit  to  the  tenement  house 
population  of  the  large  cities.  It  is  supposed  that  if 
the  tax  on  improvements,  that  is  on  houses,  is  abolished, 
the  vacant  lots  mil  be  built  over  as  if  by  magic,  rents 
will  fall,  the  wages  of  the  workmen  will  rise,  and  a 
period  of  general  prosperity  will  be  ushered  in. 

In  the  first  place  where  is  all  this  additional  capital 
coming  from  which  is  to  be  invested  in  houses?    There 


The  Fallacy  of  the  Single  Tax  227 

is  no  fund  floating  about  in  the  air  wliieh  can  be 
brought  to  earth  simply  by  the  imposition  of  the  single 
tax.  The  amounts  to  be  laid  out  in  houses  must  be 
taken  from  the  capital  now  invested  in  some  other  form 
of  productive  enterprise.  The  amount  of  loanable  capi- 
tal in  the  money  market  at  any  one  time  is  definitely 
fixed.  Even  deposits  in  banks  are  already  invested, 
for  the  most  part,  in  mortgages  or  in  corporate  securi- 
ties; that  is  they  are  already  utilized  for  productive 
purposes.  What  is  put  into  new  houses  will,  there- 
fore, simply  be  so  much  taken  away  from  other  pro- 
ductive employments. 

How  are  the  wages  of  the  workmen  to  be  increased 
by  the  single  tax?  "Wages  can  be  increased  only  thru 
an  increase  in  capital  or  thru  an  increase  of  the  effi- 
ciency of  the  laborer.  Taxation  in  itself  cannot  accom- 
plish either  of  these  results.  The  single  tax  can  have 
no  influence  on  the  wages  of  labor.  The  whole  fair 
dream  of  economic  felicity  thus  resolves  itself  into 
mere  mist,  into  mere  nothingness. 

The  single  taxers  contend  that  the  adoption  of  this 
system  will  prevent  the  great  accretions  of  wealth  by  a 
few  individuals.  Who  are  the  rich  men  of  the  world 
to-day?  How  has  by  far  the  greater  part  of  our  indi- 
vidual fortunes  been  acquired?  The  usual  cause  is 
some  fortuitous  conjecture  of  events,  some  chance 
happening  due  to  no  one's  labor,  but  to  a  tuni  in  the 
wheel  of  fortune  —  call  it  speculation,  call  it  luck,  call 
it  by  any  name  we  will.  How  have  most  of  the  for- 
tunes in  Wall  Street  been  made?  Who  is  responsible 
for  the  increased  value  of  investments?  AVho  can  say 
that  the  successful  manager  of  the  ring,  the  comer,  the 
pool  and  the  trust  has  made  his  money  thru  his  own 
industry?  If  it  be  claimed  tliat  the  fortunate  investor 
deserves  his  fortune  because  of  his  sagacity  and  fore- 
sight, why  deny  these  attributes  to  the  land  owner? 
Most  of  the  large  fovtuiies  are  due  to  the  iiicnlculabh^ 
turns    in    the    wh»^el    of    fortune,    and    the    so-called 


228  Taxation  in  New  York 

unearned  increment  of  land  values  forms  only  a  small 
share  of  these  total  gains. 

The  single  tax  on  land  values  would  utterly  ruin  the 
farmers.  The  single  taxers  assure  the  farmers  that 
they  would  be  benefited  by  the  adoption  of  this  system 
and  a  speech  made  by  Thomas  L.  Johnson  in  1905  when 
he  was  a  candidate  for  governor  of  Ohio,  is  a  sample  of 
what  the  single  taxers  tell  the  farmers.  A  venerable 
farmer  with  long  white  whiskers  arose  and  said:  "  I 
have  a  suspicion  from  what  I  have  read  in  the  papers, 
that  you  desire  to  place  all  taxes  on  land.  Is  this 
correct?" 

Altho  the  vest  majority  of  farmers  do  not  wear 
whiskers,  yet  for  illustration  the  single  taxers  must 
always  have  a  venerable  farmer  with  long  white  whisk- 
ers. The  substance  of  Thomas  L.  Johnson's  answer 
was  this :  That  under  the  present  system  the  farmers 
of  the  country  are  paying  fifty  per  cent,  of  the  taxes, 
but  have  but  five  per  cent,  of  the  values.  The  other 
ninety-five  per  cent,  of  the  values  are  possessed  by  the 
valuable  coal  lands,  the  iron,  silver,  gold,  copper,  and 
other  valuable  mines,  the  water  privileges,  the  rail- 
roads, and  their  rights  of  w^ay  and  terminals,  including 
street  railroads,  telephones,  and  telegraphs;  all  the 
gas  and  electric  lighting  rights  of  way;  and  all  the 
city  lots.  When  these  are  compelled  to  pay  their  pro- 
portion the  farmers  mil  pay  less  than  they  do  now. 

Let  us  analyze  the  above  statement.  Take  the  mines 
first.  The  mine  once  under  exploitation  can  show  an 
income  only  by  the  extinguishment  of  its  capital.  An 
iron  mine  at  Burden  in  Columbia  County,  New  York, 
has  not  been  operated  since  1893.  It  once  produced  good 
ore,  but  it  has  been  worked  out.  All  mines  must  sooner 
or  later  become  worked  out.  Governor  Emmet  D. 
Boyle  'of  Nevada,  speaking  at  the  ninth  annual  con- 
ference of  the  National  Tax  Association  held  at  San 
Francisco  in  1915,  said  that  mine  taxation  was  a  very 
vexatious  question.  No  part  of  the  assessors'  duty 
was  as  difficult  as  the  assessing  of  mines.    He  thought 


The  Fallacy  of  the  Single  Tax  229 

the  mines  of  Nevada  were  paying  more  than  their 
share  of  the  burden  of  taxation. 

Scientists  are  agreed  that  our  coal  lands  are  rapidly 
becoming  exhausted.  The  water  privileges  of  New 
York  State  are  largely  owned  by  the  State  itself.  In 
regard  to  steam  railroads  the  only  statistics  available 
is  the  annual  report  of  the  State  engineer  and  sur- 
veyor for  1882  when  the  railroads  were  under  the 
supervision  of  that  officer.  It  is  unfortunate  that  no 
State  department  is  at  present  collecting  these  statist 
tics.  For  the  year  ending  September  30,  1882,  the  New 
York  Central  and  Hudson  River  Railroad  Company, 
the  largest  railroad  in  the  State,  reported  their  land 
cost  to  be  $14,974,644,  while  they  reported  the  total  cost 
of  their  road  and  equipment  to  be  $112,756,935.  Thus 
the  cost  of  land  was  but  one-eighth  of  the  total  cost  of 
the  road  and  equipment.  Under  the  system  of  a  single 
tax  on  land  values  their  passenger  and  freight  stations 
would  be  exempt  from  taxation.  Their  rolling  stock, 
including  locomotives,  passenger  and  freight  cars 
would  be  exempt  from  taxation.  Their  engine  and 
car  houses  and  machine  shops  would  be  exempt  from 
taxation.  Their  superstructures,  including  rails  and 
ties,  would  be  exempt  from  taxation.  Even  the  bridges, 
grading  and  masonry  would  be  exempt  from  taxation. 
Only  the  bare  land  would  be  taxable.  Seven-eighths 
of  this  railroad's  property  would  be  exempt  and  only 
one-eighth  would  be  taxable.  Since  1882  the  Grand 
Central  Terminal  in  New  York  City  has  been  con- 
structed costing  millions  of  dollars  and  many  expen- 
sive stations  have  been  constructed  in  other  cities. 
To-day  one-eighth  is  too  high  for  the  proportion  the 
land  value  bears  to  the  total  value.  A  study  of  the 
other  steam  railroads  of  the  State  would  probably  dis- 
close like  conditions. 

Street  railroads  would  be  exempt  from  taxation 
entirely  under  the  system  of  a  single  tax  on  land  values 
for  the  land  used  by  them  in  running  their  cars  belong 
to  the  municipalities.     The  same  is  true  of  the  gas 


230  Taxation  in  New  York 

and  electric  light  companies.  Telephone  and  telegraph 
companies  generally  extend  thru  the  public  streets  and 
highways  and  so  could  not  be  taxed  for  land  which 
they  did  not  own. 

Finally  city  lots  would  be  taxed  under  the  system  of 
a  single  tax  on  land  values,  but  they  are  taxed  already 
for  all  they  will  sell  for  and  in  many  cases  far  beyond 
their  selling  value.  Seven-elevenths  of  the  farmers' 
wealth  consisted  of  his  land  as  the  1910  United  States 
consus  bulletin  on  agriculture  for  New  York  State 
shows.  This  bulletin  gives  the  value  of  the  farmers' 
land  in  New  York  State  to  be  $707,747,828  and  the 
value  of  his  buildings  to  be  $476,998,001.  As  the  greater 
part  of  the  farmers'  wealth  consists  of  the  bare  land  it 
can  readily  be  seen  how  injurious  the  single  tax  on 
land  values  would  be  to  him.  Contrary  to  the  impres- 
sion created  by  the  single  taxers  that  rich  people  are 
buying  up  the  land  and  that  tenant  farmers  in  New 
York  State  are  increasing  under  the  present  system  of 
taxation,  this  census  bulletin  shows  that  tenant  farm- 
ers in  New  York  State  are  decreasing.  It  states  that 
during  the  past  decade  from  1900  to  1910  the  number 
of  tenant  farms  in  the  State  had  fallen  from  54,203  to 
44,872,  a  decrease  of  9,331,  or  seventeen  per  cent. 

No  wonder  the  farmers  realize  that  the  single  tax 
on  land  values  will  ruin  them.  This  system  of  taxation 
would  result  in  the  destruction  of  the  one  class  above 
all  others  upon  which  our  prosperity  rests  —  the  class 
of  independent  small  farmers. 

The  system  of  the  single  tax  on  land  values  is 
opposed  to  social  justice  and  the  equality  of  taxation. 
Why  is  the  man  who  has  invested  his  hard  earnings  in 
land  to  be  exposed  to  the  danger  of  having  part  or  all 
of  his  property  taken  away  from  him?  When  he 
invested  his  money  in  land  it  was  on  the  basis  of  the 
accepted  policy  of  social  justice,  that  private  property 
in  land  was  to  be  treated  like  private  property  in  other 
things.  The  vast  majority  of  land  owners  are  modest 
and  numberless  men  in  modest  circumstances.     Why 


The  Fallacy  of  the  Single  Tax  23i 

should  the  selling  value  of  their  land  be  so  diminished 
by  an  act  of  government  that  a  part  or  all  of  their 
property  is  confiscated?  Does  it  not  run  counter  to 
our  very  ideas  of  social  justice  and  of  equahty  of 
taxation?  Of  course,  those  who  hold  that  there  are  no 
vested  rights  in  land  would  brush  aside  this  argument, 
but  the  common  sense  of  most  people  is  not  yet  ready 
to  go  to  the  length  of  accepting  the  bald  proposition 
that  the  State  has  a  right  to  take  away  a  man's  prop- 
erty mthout  compensation. 

The  single  tax  is  a  proposal  hundreds  of  years  old, 
exploded  every  time  it  has  been  studied  seriously,  and 
now  kept  alive  chiefly  by  funds  contributed  by  enemies 
of  true  tax  reform. 


CHAPTER  XV 
UNTAXING   BUILDINGS 

Of  late  years  there  has  been  quite  an  agitation  for 
the  exemption  of  improvements  partly  or  wholly  from 
taxation.  This  means  the  untaxing  of  buildings.  The 
agitation  has  been  ingeniously  managed  so  as  to  iden- 
tify it  in  the  popular  mind  with  a  project  for  lowering 
rents.  The  Society  for  Lowering  Eents  in  New  York 
City  Ixas  had  introduced  into  the  Legislature  for  sev- 
eral years  bills  to  reduce  the  tax  rate  on  improvements 
in  New  York  City  to  one-half  the  tax  rate  on  land.  The 
single  taxers  have  warmly  seconded  the  movement  as 
a  step  towards  the  single  tax  and  the  Progressive 
Party  during  its  short  rise  and  fall  endorsed  the  pro- 
ject in  its  platform.  Many  social  workers  have 
espoused  the  cause  thinking  it  would  eliminate  the 
slums  of  our  cities. 

It  is  a  very  interesting  proposition.  It  shows  with 
what  ease  an  attempt  can  be  made  to  simplify  complex 
problems.  To  the  earnest  investigator  the  matter  is 
much  more  serious.  It  has  long  been  recognized  that  of 
all  the  problems  in  economics  that  of  the  incidence  and 
effects  of  taxation  is  one  of  the  most  subtle  and  diffi- 
cult. A  change  in  the  methods  of  taxation,  far  from 
being  so  simple  a  matter  as  the  advocates  of  halving 
the  tax  rate  on  buildings  imagine,  is  in  reality  a  sub- 
ject which  calls  for  the  most  careful  analysis  and  for 
the  most  accurate  knowledge  of  economic  law. 

The  two  shibboleths  of  this  agitation  are  lower  rents 
and  prevention  of  congestion.  It  is  well  known  that 
the  backbone  of  this  movement  is  the  small  but  active 
band  of  single  taxers  whose  ultimate  aim  is  to  levy 
taxes  on  bare  land  values.  In  order,  however,  not  to 
affright  the  public,  the  scheme  is  here  introduced  in  the 
guise  of  a  sIoav,  gradual  reduction  of  the  tax  on  build- 

[232] 


Untaxing  Buildings  233 

ings.  To  the  extent  that  the  change  is  only  partial, 
the  effects,  whetlier  favorable  or  unfavorable,  will  be 
slight.  In  order,  however,  to  recognize  the  tendency 
of  the  measure  and  to  realize  its  full  import,  we  must 
study  the  efi'ects  of  the  change  as  a  totality,  and  then 
subsequently  make  allowance  for  the  degree  in  which 
the  partial  adoption  of  the  scheme  falls  short  of  the 
whole. 

The  first  question  to  be  answered  is,  will  house  rents 
be  lowered,  and  if  so  to  what  extent? 

The  theory  is  that  if  the  tax  were  taken  off  of  build- 
ings more  houses  w^ould  be  built  and  the  increased 
supply  of  houses  would  lower  rents.  Furthermore  it 
is  contended  that  the  exemption  of  improvements  from 
taxation  would  lead  to  a  continuous  activity,  and  that 
the  resulting  demand  for  capital  would  continually 
raise  wages,  induce  prosperity,  and  increase  popu- 
lation. 

Granting  that  more  houses  will  be  built,  will  the 
effect  be  a  permanent  or  merely  a  temporary  one  ?  It  is 
often  said  that  houses  are  like  anything  else;  reduce 
the  price  and  you  increase  the  consum])tion.  But  this 
statement  fails  to  consider  a  marked  difference  between 
houses  and  other  things.  The  demand  for  most  com- 
modities is  elastic  and  will  increase  almost  without 
limit,  provided  the  price  falls  low  enough.  On  the 
other  hand  the  demand  for  houses  is  limited.  If  the 
price  of  clothes  falls  considerably,  people  will  buy 
more  clothes  or  better  clothes,  and  the  further  the 
price  falls  the  more  clothes  they  will  buy.  But  the 
demand  for  houses  is  strictly  limited  by  the  extent  of 
the  population.  More  houses  will  not  mean  more 
tenants. 

It  is  (piitc  true  that  in  every  large  city  there  is  a 
small  percentage  of  the  population  composed  of  people 
wlio  do  not  live  in  rooms  of  their  own,  but  who  are 
boarders  or  knlgers  with  other  peo])le.  If  more  houses 
arc  built  and  rents  fall,  these  people  who  have  hitherto 
been  unable  to  occupy  apartments  of  their  own  will 


234  Taxation  in  New  York 

indeed  be  put  in  a  position  to  do  so.  But  after  the 
slack  has  been  taken  up,  and  after  all  the  boarders  and 
lodgers  are  housed  in  apartments  of  their  own,  what 
will  happen!  To  build  more  houses  would  simply  mean 
to  build  vacant  houses. 

Is  it  not  true,  therefore,  that  as  soon  as  the  interval 
has  elapsed  —  one,  two  or  three  years,  sufficient  for 
the  building  of  the  additional  houses, —  the  new  equili- 
brium between  housing  and  population  will  have  been 
reached,  and  that  there  will  be  no  further  demand  for 
new  buildings,  except  that  which  comes  from  ordinary 
growth  of  the  population  ?  This  dema,nd  existed  before 
the  change  in  taxation  and  it  will  persist  after  the 
change.  Where  then  will  be  the  continuous  demand 
for  new  houses,  for  new  capital,  and  for  more  labor? 
The  only  effect  of  a  sudden  exemption  of  houses  from 
taxation  \vill  mean  a  building  boom  which  will  be  over- 
done and  which  will  inevitably  be  followed  by  a  col- 
lapse, by  a  pricking  of  the  bubble,  with  the  ultimate 
result  that  only  the  normal  number  of  houses  wnll 
thereafter  be  built  every  year. 

The  advocates  of  this  system  have  told  us  about  the 
wonderful  effects  of  the  exemption  of  buildings  in 
Vancouver  and  other  cities  of  Western  Canada.  In 
Vancouver  immediately  after  the  complete  exemption 
of  buildings  from  taxation  in  1910  there  was  a  great 
building  boom.  The  building  permits  in  Vancouver  in 
1910  amounted  to  $13,150,365.  In  1911  they  amounted 
to  $17,652,642  and  in  1912  they  amounted  to  $19,388,- 
322.  This  was  the  maximum  and  then  they  began  to 
decrease  very  fast.  In  1916  they  amounted  to  only 
$2,412,889.  Everyone  knows  that  the  influence  of  taxa- 
tion is  subordinate  to  the  wider  and  more  important 
influences  of  general  economic  development  and  that 
neither  the  boom  nor  the  collapse  can  be  ascribed  to 
taxation  alone.  The  single  taxers  tell  us  that  this 
collapse  in  the  building  boom  is  due  to  the  great  world 
war,  but  even  before  the  war  the  building  permits  in 
Vancouver  had  decreased  to  $10,424,447  in  1913. 


Untaxing  Buildings  235 

Most  houses  are  built  nowadays  on  building  loans 
and  the  amount  of  the  loan,  as  well  as  the  rate  of 
interest,  is  in  a  certain  jDroportion  to  the  value  of  the 
land,  if  the  increased  tax  on  the  land  diminishes  its 
value,  either  less  money  can  be  borrowed  or  a  higher 
rate  of  interest  will  have  to  be  paid,  and  in  either  case 
there  will  be  an  impediment  to  the  erection  of  new 
houses.  Let  the  selling  value  of  the  land  be  taken 
away  for  any  reason  from  the  man  who  borrowed 
money  or  made  a  loan  for  the  erection  of  a  building, 
and  the  loaning  companj^  would  increase  the  rate  of 
interest  on  the  mortgage  because  then  they  would  be 
lending  entirely  on  the  security  of  the  building.  In- 
cluded in  this  mortgage  loan  would  have  to  be  a  certain 
sum  for  the  deterioration  of  the  building  so  that  it 
would  cost  the  builder  more  for  the  money.  This  would 
increase  the  price  of  the  building  and  would  also 
increase  the  operating  cost.  Therefore,  the  tenant 
would  have  to  pay  rent  based  on  the  increased  operat- 
ing cost  in  order  to  give  the  builder  back  his  money  and 
that  would  mean  the  tenant  would  have  to  pay  a  higher 
rent. 

Real  estate  owners  under  present  conditions  depend 
on  expected  increases  in  the  value  of  their  land  to 
offset  the  depreciatioii  in  their  buildings,  and  there- 
fore depreciation  is  not  now  included  in  rents.  The 
exemption  of  buildings  from  taxation  Avould  depreciate 
land  values.  Thei'efore  landowners  woukl  be  compelled 
to  add  depreciation  to  the  rentals  charged  their  ten- 
ants. Depreciation  is  a  legitimate  part  of  tlie  cost  of 
furnisliing  building  accommodation. 

In  May  1913  the  Stein  Bill  became  a  law  in  Pennsyl- 
vania, which  ])i-ovided  for  the  gradual  reduction  of  the 
tax  on  buildings  in  the  second  class  cities  of  that  State. 
It  applies  to  Pittsburg  and  Scranton  only.  In  1918 
Thomas  J.  TTawkings,  the  chief  assessor  of  Pittsburg, 
reported  that  the  effect  of  this  law  in  Pittsburg  had 
not  reduced  rents  nor  had  it  increased  the  building  of 


236  Taxation  in  New  York 

more  houses.  Its  only  effect  so  far  had  been  to  increase 
the  city  tax  rate.  He  thought  that  sooner  or  later  the 
law  would  be  repealed.  In  Scranton  according  to  the 
city  soUcitor  the  results  of  the  law  are  not  yet  appar- 
ent owing  to  the  gradual  reduction  of  the  rate  at  which 
buildings  are  taxed.  Thus  after  a  five  years'  trial  in 
these  two  cities  the  benefits  claimed  for  the  untaxing 
of  buildings  have  proved  visionary  in  character. 

In  1914  Professor  Robert  Murray  Haig  of  Columbia 
University  was  sent  to  Western  Canada  by  Mayor 
John  Purroy  Mitchell's  committee  of  twenty-seven 
appointed  to  investigate  new  sources  of  city  revenue 
for  New  York  City.  It  was  Professor  Haig's  duty  to 
make  a  thoro  study  of  the  workings  of  the  exemption 
of  improvements  from  taxation  in  the  municipalities  of 
Alberta,  British  Columbia,  Manitoba,  and  Saskatch- 
ewan. In  his  report  concerning  rents  he  testified  that 
the  whole  situation  there  had  been  abnormal.  About 
1910  there  had  been  a  sudden  spurt  of  growth  of  the 
cities  of  Western  Canada  so  that  it  had  been  impossi- 
ble to  supply  the  demand  for  houses  and  business 
quarters.  It  is  said  that  four  thousand  people  lived  in 
tents  in  Edmonton,  in  the  Province  of  Alberta,  thru 
the  winter  of  1912.  Rentals  are  proverbially  unstable 
and  susceptible  to  influence.  A  few  houseless  tenants 
or  a  few  tenantless  houses  can  do  much  to  demoralize 
rents.  The  law  of  supply  and  demand  regulates  the 
price  of  rents. 

Rents  will  not  go  down  unless  more  houses  are  built 
and  to  build  more  houses  requires  more  capital.  As 
building  operations  are  generally  financed  by  a  system 
of  loans  from  savings  banks,  insurance  companies,  or 
loan  associations,  by  which  money  is  advanced  during 
construction,  it  is  extremely  doubtful  if  in  the  face  of 
falling  land  values  these  organiz^ations  would  care  to 
loan  their  money  on  real  estate  mortgages.  The  natural 
tendency  of  capital  will  be  to  avoid  real  estate  invest- 
ments if  equities  are  to  be  destroyed.    This  would  so 


Untaxing  Buildings  237 

far  to  counteract  the  incentive  to  erect  new  buildings 
caused  by  the  total  or  partial  removal  of  taxes  on 
buildings. 

Builders  who  put  up  buildings  for  rent  are  compelled 
by  the  competition  of  other  buildings  to  put  up  a  cer- 
tain kind  of  building  for  the  people  who  are  able  to  pay 
twenty  dollars  a  month,  a  little  different  one  for  those 
who  can  pay  thirty  dollars  a  month,  and  so  on.  It  is 
difficult  to  see  how  the  housing  conditions  will  be  bet- 
tered one  bit  by  the  untaxing  of  buildings. 

Have  wages  been  increased  in  those  cities  where 
improvements  have  been  exempted  from  taxation?  A 
prominent  labor  leader  of  Vancouver,  British  Colum- 
bia, expressed  himself  in  regard  to  this  matter  to  Pro- 
fessor Haig  as  follows : 

' '  The  tax  has  certainly  not  operated  to  improve  the 
condition  of  the  workingman.  It  has  not  increased 
wages.  There  has  been  a  great  deal  of  building,  but 
the  building  activity  has  attracted  so  many  working- 
men  that  an  over-supply  of  labor  has  resulted.  Car- 
penters still  receive  the  same  wages  which  they 
received  in  1907  in  spite  of  the  fact  that  the  cost  of 
living  has  meanwhile  increased  enormously.  Such 
workingmen  as  have  tried  to  take  advantage  of  the 
single  tax  now  find  that  the  little  houses  which  they 
have  built  have  become  millstones  about  their  necks. 
With  the  collapse  of  the  building  boom  the  opportunity 
to  work  has  been  taken  away  and  it  is  impossible  for 
the  men  to  make  the  payments  on  their  houses.  This 
is  partly  their  own  fault  in  that  many  of  them  assumed 
heavier  obligations  than  they  could  rationally  expect 
to  carry.  Many  workingmen,  for  instance,  have  bought 
extra  lots  for  speculative  purposes.  The  single  tax 
had  the  effect  of  temporarily  expediting  building 
operations.  This  gave  an  impression  of  prosperity 
which  was  false  and  this  reacted  to  cause  an  over-valu- 
ation of  land.  This  high  price  of  land  has  reacted  to 
the  disadvantage  of  the  city  in  its  attempts  to  secure 


238  Taxation  in  New  York 

the  location  of  industries.  The  really  wise  man  was 
the  one  who  got  rid  of  his  real  estate  before  this  dull 
season  began." 

Professor  Haig  was  unable  to  find  any  labor  leaders 
in  any  of  the  cities  of  WesternC  anada  who  thought  the 
workingmen  had  been  benefited  by  this  new  system  of 
taxation. 

Who  would  receive  the  most  benefit  from  the  exemp- 
tion of  improvements  from  taxation,  the  poor  man  or 
the  rich  man"?  F.  C.  Wade  of  Vancouver,  British  Col- 
umbia, one  of  the  leading  lawyers  of  Western  Canada 
and  who  was  one  of  the  Canadian  commissioners  at 
the  conference  between  the  United  States  and  Canada 
over  the  Alaskan  boundary  question,  has  given  the 
result  of  an  investigation  he  made  in  1914  in  regard 
to  the  building  permits  issued  in  the  City  of  Vancouver 
during  the  year  1913,  dividing  them  into  (first)  room- 
ing houses,  (second)  factory  and  warehouses,  (third) 
offices  and  stores,  and  (fourth)  private  houses;  and 
then  ascertaining  the  amounts  expending  on  each  class 
of  building.  His  analysis  is  summarized  as  follows : 
The  poorer  classes  were  responsible  for  one-eighteenth 
of  the  improvements  and  the  owners  of  the  more  expen- 
sive buildings  for  seventeen-eighteenths  of  the  improve- 
ments. The  system  of  totally  exempting  buildings 
from  taxation  has  been  in  vogue  in  Vancouver  since 
1910  and  the  grand  aggregate  of  improvements 
exempted  for  three  years  or  to  the  beginning  of  1914 
amounted  to  $419,056,525.  Out  of  this  grand  aggregate 
the  poorer  man  secured  exemption  'on  $23,280,918, 
while  the  exemption  of  the  wealthy  classes  amoimted  to 
$395,775,607.  Mr.  Wade  says:  '' This  system  of  taxa- 
tion is  called  the  poor  man's  boon!  We  hear  nothing 
about  the  rich  man's  boon!" 

What  about  the  prosperity  argument  advanced  in 
favor  of  exempting  improvements  from  taxation? 
Professor  Haig  mentions  a  barrister  of  Vancouver, 
British  Columbia,  whose  ability  is  unquestioned,  as 


Untaxing  Buildings  239 

saying;  "  The  single  taxers  in  Vancouver  used  to 
appeal  to  tlie  prosxJerity  argument  in  supjDort  of  the 
policy  in  this  city.    They  do  not  do  that  any  more. ' ' 

Beginning  just  before  the  outbreak  of  the  great 
world  war  and  continuing  to  the  ^jresent,  Western 
Canada  has  had  very  hard  times.  The  single  taxers 
assert  that  this  depression  is  due  to  the  war  and  not 
to  the  new  system  of  taxation. 

The  population  of  these  cities  of  "Western  Canada  is 
also  decreasing,  it  reached  its  high  water  mark  in 
1912  and  since  then  it  has  been  steadily  falling.  In 
1912  the  population  of  Vancouver,  British  Columbia, 
was  122,100,  but  in  1916  it  had  decreased  to  95,922,  a 
decrease  of  26,178,  or  more  than  one-fifth. 

Bank  clearings  in  these  cities  of  Western  Canada 
have  also  decreased.  For  the  year  1912  the  bank  clear- 
ings in  Saskatoon,  Saskatchewan,  amounted  to  $115,- 
898,477,  but  the  next  year  they  dropped  to  $96,034,723 
and  they  have  been  steadily  decreasing  each  year  since 
then.  Vancouver,  British  Columbia,  had  bank  clear- 
ings of  $645,118,887  in  1912,  but  in  1913  its  bank  clear- 
ings amounted  to  $606,899,710.  The  gross  revenue  of 
postal  receipts  in  these  cities  have  also  shown  a 
falling  off. 

Passing  now  to  the  second  shibboleth  of  this  agita- 
tion, that  it  will  prevent  congestion,  a  little  study  of 
this  question  will  show  that  instead  of  preventing  con- 
gestion it  will  cause  greater  congestion  than  now  exists 
in  our  cities.  Is  it  not  plain  that  if  buildings  are 
exempted  from  taxation  the  owners  of  sky  scrapers 
vnW  receive  more  benefit  than  the  owners  of  small 
private  houses.  There  will  manifestly  be  every  induce- 
ment to  prospective  builders  to  enlarge  their  profits 
by  increasing  the  height  of  l)uil(lings.  The  consequence 
of  this  will  be  a  great  increase  in  the  density  per  acre, 
with  all  the  resulting  discomforts  and  dangers  in  the 
streets  and  consequent  need  of  spending  still  more 
money  for  parks  and  ojx'ii  spaces. 


240  Taxation  in  New  Yoek 

The  tendency  of  an  increased  tax  on  land  values  must 
always  be  a  more  intensive  utilization  of  the  land.  This 
will  mean  a  more  compactly  built  city  than  at  present. 
It  will  mean  no  open  spaces,  it  will  mean  no  gardens 
around  the  houses;  it  mil  mean  house  next  to  house 
and  apartment  by  apartment;  it  will  mean  in  short  a 
repetition  of  all  the  worst  evils  of  the  slums  spread 
thruout  the  entire  city.  Land  speculation  may  have 
its  abuses,  but  this  evil  at  least  it  avoids.  An  unbuilt 
lot  may  seem  in  some  respects  a  waste,  but  at  least  it 
affords  fresh  air  and  sunlight  and  grateful  space. 

Yet  in  spite  of  these  facts  the  advocates  of  untaxing 
buildings  assert  that  it  will  prevent  congestion.  They 
say  that  if  thru  more  intensive  development  of  the 
most  valuable  parcels  of  land  more  business  should  be 
transacted  or  more  people  have  their  dwellings  on  an 
acre  than  at  present  that  this  would  not  be  congestion 
but  instead  that  it  would  be  organization  on  the  basis  of 
the  greatest  economy.  And  as  to  the  limitation  of  gar- 
den space  which  would  result  from  the  intensive  devel- 
opment of  a  city's  center  they  say  that  gardens  do  not 
belong  there  anyhow.  Gardens  they  say  would 
undoubtedly  stick  to  the  fringe  of  the  city. 

It  is  interesting  to  note  what  F.  C.  Wade  of  Van- 
couver, British  Columbia,  thinks  of  this  view.  He 
says:  ''  One  of  the  great  advantages  claimed  for  the 
exemption  of  improvements  is  that  it  ensures  a  com- 
pact city.  It  is  the  proud  boast  of  the  building  inspec- 
tor of  Vancouver  that  per  square  mile  of  area  Van- 
couver leads  every  city  on  the  continent  of  America 
for  compactness.  It  is  in  order  now  for  some  one  to 
point  with  approval  to  the  huddled  condition  of  Lon- 
don before  the  fire,  or  to  hold  up  the  most  crowded 
quarters  of  Canton,  China,  as  a  model  to  the  world." 

Call  it  compactness  or  congestion  or  whatever  you 
will,  ought  not  this  fact  alone  be  enough  to  condemn 
the  system?  The  taxes  on  gardens,  lawns  and  open 
spaces  become  prohibitory.    Everything  must  be  built 


Untaxing  Buildings  241 

up.  Every  open  gap  must  be  closed.  We  must  have 
a  compact  city.  Rather  than  expand  our  area  let  us 
build  two  hundred  feet  in  the  air  and  immure  our 
families,  particularly  our  children,  in  apartment  blocks 
and  deprive  them  as  far  as  possible  of  every  beautiful 
and  healthful  natural  surrounding.  At  the  same  time 
we  are  likely  to  have  some  trouble  in  escaping  from 
the  conclusion  that  a  crowded  city  is  a  standing  invita- 
tion to  fire  and  a  menace  to  the  health  and  enjoyment 
of  its  i^opulation. 

A  recent  pamphlet  prepared  by  the  tenement  house 
committee  of  the  charity  organization  society  says: 
''  Don't  rent  dark  rooms.  Fresh  air  and  light  in  every 
room  are  better  than  medicine.  Plants  can  not  grow 
in  the  dark,  neither  can  children.  A  dark  room  is  a 
consumption  factory.  Gas  bills  and  medicine  bills  soon 
equal  the  difference  in  rent  between  good,  light  rooms 
and  dark,  unhealthy  ones."  It  is  imperative  that,  so 
far  as  possible,  we  give  the  workers  an  opportunity  to 
live  in  homes  instead  of  four-story  tenements,  and  to 
let  their  children  run  in  yards  and  fields  instead  of  the 
paved  court  and  crowded  street.  There  should  be  fit 
housing  for  the  toiler,  and  American  cities  must  give 
serious  attention  to  this  problem. 

What  is  a  house?  It  is  the  prime  element  of  national 
growth.  It  is  the  soil  whence  springs  that  eagerness  in 
the  heart  of  every  man  for  a  home  of  his  OAvn.  It  is, 
after  all,  the  physical  attribute  of  life  upon  the  posses- 
sion or  retention  of  which  most  of  our  energy  is 
directed.  Because  of  these  things,  it  is  the  backbone  of 
the  nation.  By  the  quality  of  its  appearance,  its  con- 
venience, its  durability,  one  may  infallibly  determine 
the  real  degree  of  a  nation's  prosperity  and  civiliza- 
tion. 

In  the  great  and  wonderful  epic  of  America  we  have 
been  thrilled  with  the  first  coming  of  tlie  pioneer.  As 
he  took  his  way  westward  into  the  depths  of  the  wilder- 
ness we  have  journeyed  with  him,  breathless,  in  the 
great  adventure.    We  have  tingled  with  joy  over  the 


242  Taxation  in  New  York 

picture  of  the  rude  home,  the  family  fireside,  the  wel- 
coming hearth-fire,  and  the  sheltering  roof-tree. 

Home  ownership,  where  the  small  dwelling  is  the 
miit,  forces  a  better  type  of  citizenship  because  the 
citizen  cannot  escape  the  consequences  when  things  go 
wrong.  Neighborhood  evils  affect  the  value  of  his 
proj)erty  and  for  such  reason,  if  not  for  the  morals  of 
his  family,  the  owner  will  exert  himself.  It  is  almost 
repeating  a  truism  to  say  that  the  most  conserving 
and  conservative  force  acting  to  hold  man  to  the  reten- 
tion of  the  best  in  civilization  is  the  little  patch  of 
ground  with  the  hut  upon  it  that  he  calls  his  own. 

Any  agency  w^hich  helps  poor  people  or  people  in 
modest  circumstances  to  obtain  homes  of  their  own 
deserve  the  highest  words  of  commendation.  For  that 
reason  savings  banks  and  loan  associations  cannot  be 
praised  too  highly.  They  help  to  make  a  better 
citizenship. 

In  regard  to  the  housing  problem  it  is  generally 
accepted  that  not  more  than  twenty  per  cent  of  the 
family  income  should  go  for  rent.  Yet  according  to 
John  Nolan  in  his  address,  ''Industrial  Housing," 
delivered  before  the  Fifth  National  Housing  Confer- 
ence in  1916,  the  simplest  acceptable  standard  of 
American  home,  whether  single  cottage  in  \allage  or 
suburb,  or  wholesome  apartment  in  a  large  city,  costs 
on  an  average  from  $1,800  to  $2,000  per  family,  includ- 
ing land  and  improvements.  This  means  on  a  basis  of 
moderate  commercial  profit  (five  or  six  per  cent),  a 
rent  of  fifteen  dollars  a  month  at  the  least.  More  than 
half  of  all  the  worldng-men  in  the  United  States  receive 
less  than  fifteen  dollars  a  week.  Here  appears  to  be  a 
stone  wall  preventing  decent  housing  in  our  cities. 

By  changing  the  excess  condemnation  amendment  to 
the  State  constitution  adopted  by  the  people  in  1913 
communities  could  buy  land  and  build  houses  for  work- 
ing people  either  in  the  city  itself  or  in  garden  suburbs. 
It  could  rent  them  and  remain  a  landlord,  or  it  could 
sell  them  to  the  tenants  on  a  system  of  long  term,  easy 


UxTAxixG  Buildings  243 

payments.  The  credit  of  the  community  can  secure 
capital  at  a  lower  rate  of  interest  than  can  private 
associations. 

All  private  philantropic  and  co-operative  housing 
associations  that  help  city  people  to  live  in  sanitary 
houses  at  moderate  rentals  should  be  encouraged. 
Before  passing  mention  should  be  made  of  the  City  and 
Suburban  Homes  Company  of  New  ,York  City  which 
owns  and  manages  model  tenements  housing  fifteen 
thousand  people  in  the  Boro  of  Manliattan.  This 
company  was  organized  in  1896  and  was  founded  as  a 
sort  of  business  charity  to  give  tenement  housing  at 
no  more  profit  than  four  per  cent,  to  its  stockholders. 
With  the  low  dividend  paid  on  the  company's  capital  — 
less  than  the  return  in  interest  on  its  mortgaged  prop- 
erty—  this  has  meant  giving  better  quarters  to  ten- 
ants for  less  money.  The  action  of  this  company  is  in 
refreshing  contrast  to  the  assertions  of  the  single  tax- 
ers  Avho  continually  assert  that  the  average  landlord 
charges  the  highest  rent  he  can  get.  And  the  only 
reason  landlords  do  not  charge  more  say  the  single 
taxers  is  that  they  cannot  find  anybody  able  and  will- 
ing to  pa}^  more. 

The  pathetic  instances  of  single  family  dwellings 
sandwiched  between  buildings  of  ninety  feet  and  one 
hundred  and  fifty  feet  appeal  to  one  who  knows  w^hat 
sacrifice  of  value  has  resulted  and  what  miserable 
conditions  of  human  habitation  exist.  Such  skyscrap- 
ers have  stolen  the  little  dwelling's  light  and  air.  And 
yet  under  the  untaxing  of  buildings  that  little  dwelliiig 
house  would  have  to  pay  the  same  taxes  as  the  tall  sky 
scrapers  on  each  side  of  it.  Any  sixty  foot  street  that 
may  be  fully  developed  with  nine  stoiy  apartments 
ninety  feet  high  is  unfit  for  human  habitation,  and 
exercises  a  like  influence  upon  the  adjoining  parallel 
street.  An  angle  of  forty-five  degrees  produced  by 
the  rule  of  once  the  width  of  the  stre^^t  is  insufficient  to 
give  sunlight  in  short  winter  days  to  the  lower  stories. 


244  Taxation  in  New  Yoek 

Thirty  years  ago  the  steel  frame  was  invented.  Thirty 
years  before  that  the  elevator  had  been  invented.  These 
two  inventions  have  done  much  to  create  the  evil  of 
high  buildings. 

In  all  the  southern  part  of  Manhattan  Island  there 
are  now  a  large  number  of  very  lofty  buildings.  The 
first  building  that  went  up  of  that  time,  twenty  or 
thirty  stories,  or  the  old  ones  eighteen  to  twenty  stories 
high,  paid  very  well  because  it  was  not  only  using  the 
land  that  the  owner  of  the  building  owned  but  was 
using  a  large  part  of  the  land  that  his  owners  owned, 
and  it  made  a  profit  out  of  stolen  goods.  Even  the 
single  taxers  are  forced  to  concede  the  injustice  done 
the  small  building  sandwiched  between  two  tall  sky- 
scrapers, but  they  argue  that  this  condition  must  be 
corrected  by  a  zoning  system  for  each  city. 

A  tenement  house  is  built  in  the  middle  of  nice, 
single-family  detached  residences.  Half  the  value  of 
the  houses  within  a  few  hundred  feet  of  that  tenement 
house  is  gone  over  night.  Men  want  to  sell  and  go 
away.  House  values  still  further  decline,  presently 
the  houses  are  torn  down  to  give  way  to  other  tene- 
ment houses  of  like  kind.  All  this  is  a  dreadful  eco- 
nomic waste,  because  whenever  buildings  are  sacrificed 
before  their  usefulness  is  at  an  end  it  is  a  loss  to  the 
community  as  a  whole  as  well  as  to  the  owner. 

When  one  man  builds  a  house  that  is  unsuitable  as  to 
height,  he  forces  his  neighbors  to  do  the  same  or  suffer 
great  loss.  These  neighbors  will  probably  suffer  great 
loss  any^vay,  but  at  the  time  they  think  they  might  win 
out  if  they  follow  his  example.  Cases  sometimes  occur 
where  a  single  factory'^  invades  a  residence  street  for 
some  more  or  less  accidental  reason  and  no  others  see 
any  advantage  in  following.  A  slump  in  land  values 
result,  because  the  locality  is  no  longer  pleasant  or 
healthful  to  live  in,  and  houses  have  to  be  put  to  uses  to 
which  they  are  ill  adapted,  or  changed  over  or  left 
vacant,  to  the  loss  of  the  owners  and  the  community. 


Untaxing  Buildings  245 

New  York  City  adopted  a  building  zone  plan  July 
25, 1916.  The  zone  plan  creates  the  business  center,  the 
manufacturing  section,  the  residential  district,  and 
many  other  local  differences.  When  zoning  a  city  the 
municipality  should  be  studied  street  by  street  and 
block  by  block.  •  It  is  only  fair  that  each  owner  should 
contribute  to  the  light  and  air  of  the  block.  The  pur- 
pose of  zoning  is  to  secure  to  each  section  of  the  city 
as  much  light,  air,  safety  from  fire  and  relief  from  con- 
gestion, with  all  its  attendant  evils,  as  is  consistent 
with  the  most  beneficial  use  of  the  land. 

Under  the  zone  plan  trade  and  industry  are  entirely 
excluded  from  the  residental  districts.  The  undoubted 
fact  that  the  intrusion  in  a  residence  block  of  the 
garage,  factory  or  other  business  building  means  a 
decline  in  rental  and  property  values,  is  not  based 
solely  or  even  largely  on  sentimental  considerations, 
but  almost  wholly  in  considerations  of  health,  safety, 
comfort  and  convenience.  Quiet  and  freedom  from  the 
distraction  incident  to  trade,  industry  and  attendant 
street  traffic  are  essential  to  a  wholesome  home 
environment.  Especially  in  the  crowded  sections  the 
streets  must  be  used  as  breathing  spaces  for  the  moth- 
ers and  play  spaces  for  the  children.  The  traffic  in  a 
residential  block  incident  to  a  few  business  or  indus- 
trial buildings  may  make  the  street  a  very  unsafe  place 
for  the  children  who  play  therein.  This  helps  in  the 
congested  districts  to  thwart  the  play  instinct.  Ernest 
K.  Coulter,  for  many  years  clerk  of  the  Children's 
Court  of  Manhattan,  has  testified  that  he  had  found 
by  investigation  that  this  thwarting  of  the  play  instinct 
was  responsible  for  at  least  forty  per  cent,  of  the 
delinquency  cases  coming  before  the  Children's  Court. 

There  is  in  every  city  a  greater  difference  in  the 
degree  of  concentration  in  its  different  sections.  In 
the  business  center,  for  instance,  where  contacts  must 
be  quick  and  frequent,  people  must  be  closer  together 
than  in  residential  section  where  life  may  be  quieter 


246  Taxation  in  New  York 

and  more  comfortable.  Manifestly  regulation  of  the 
intensity  of  building  cannot  be  the  same  for  the  two 
sections.  The  city's  natural  tendency  must  be  aided 
and  protected.  A  section  of  a  city  suitable  for  resi- 
dence, for  instance,  is  often  ruined  for  that  purpose 
by  the  intrusion  of  factories,  with  their  smoke,  noise 
and  odors ;  and,  if  a  high  class  residence  section,  even 
by  the  coming  of  business.  When  industry  or  business 
is  best  suited  to  a  district,  and  land  will  sell  higher  for 
such  purposes  than  any  other,  the  locality  is  bound  to 
be  transferred,  and  nothing  can  be  done,  or  should  be 
attempted,  to  prevent  it. 

The  transportation  question  is  most  intimately 
related  to  housing.  Transit  conveniences  of  an  inferior 
grade  or  too  dear  for  the  working  classes  to  afford, 
help  to  cause  congestion  in  our  cities.  Every  city 
should  take  some  action  so  as  to  provide  suburban 
transit  ahead  of  the  city's  present  needs.  When  a 
transportation  company  extends  its  existing  line  into 
territory  from  which  no  adequate  returns  can  be 
obtained,  it  should  be  encouraged  as  far  as  possible. 

It  is  only  fair  to  state  that  New  York  City's  building 
zone  plan  had  the  hearty  co-operation  of  the  real  estate . 
owners  of  Greater  New  York.  The  single  taxers  would 
have  us  believe  that  the  opposite  was  the  case.  In  1917 
there  were  103,718  apartment  or  tenement  houses  in 
Greater  New  York  containing  982,876  apartments. 
There  are  three  divisions  of  apartment  houses  —  ele- 
vator apartments,  walk  ups  with  steam,  and  cold  water 
flats. 

A  short  history  of  the  movement  for  the  exemption 
of  improvements  from  taxation  in  the  municipalities 
of  Western  Canada,  to  which  so  many  references  have 
already  been  made,  is  quite  appropriate  in  this  chapter. 
The  British  North  American  Act  of  1867  constituting 
the  Dominion  of  Canada  took  away  from  the  different 
provinces  the  right  to  levy  customs  and  excise  duties. 
But  in  return  for  these  concessions  on  the  part  of  the 


Untaxing  Buildings  247 

provinces  a  system  of  subventions  was  evolved  which 
provided  for  the  transfer  annually  of  considerable 
sums  from  the  Dominion  to  the  various  provincial 
treasuries.  These  sums  are  so  substantial  as  to  make 
the  problem  of  provisional  financing  much  more  simple 
than  it  otherwise  would  be.  This  in  turn  has  operated 
to  encourage  the  separation  of  the  sources  of  provin- 
cial and  local  revenues,  which  has  proceeded  to  a 
point  of  great  completeness.  This  is  the  cause  of  the 
ease  with  which  radical  legislation  is  adopted  is  that 
the  action  of  one  community  does  not  directly  affect 
other  cities.  Where  a  tax  base  is  used  to  supply  only 
one  municipality  it  may,  of  course,  be  changed  much 
more  readily  than  when  a  number  of  municipalities 
depend  upon  it  for  their  revenues. 

In  Manitoba  and  Saskatchewan  no  provincial 
revenues  are  raised  thru  land  taxes.  Alberta  raises 
but  little  money  from  direct  taxes  on  property. 
British  Columbia  depends  upon  ordinary  forms  of 
taxation  for  only  a  very  small  part  of  its  total  revenues. 
Its  principal  receipts  are  the  income  from  timber 
royalties  and  licenses,  land  sales,  taxes  upon  incoming 
Chinese,  and  subventions  from  the  Dominion  govern- 
ment. The  municipalities  and  tow^ns  of  Western 
Canada  are  therefore  left  free  to  raise  their  revenues 
in  any  way  they  see  fit  and  to  experiment  as  much  as 
they  like  with  taxation  nostrums. 

The  question  arises,  how  did  these  cities  come  to 
adopt  the  partial  or  total  exemption  of  improvements 
from  taxation?  During  the  last  twenty  years  there 
has  been  an  unusual  development  in  Western  Canada. 
Great  wheat  fields  were  being  opened  up  and  by  skill- 
ful immigration  propaganda  new  settlers  were  flocking 
in  from  all  parts  of  the  world.  The  Hudson 's  Bay  Com- 
pany, which  once  dominated  this  whole  region,  did  not 
look  with  favor  upon  this  development  for  it  meant  a 
lessening  of  the  company's  influence  and  profits.  Con' 
sequently  the  Hudson's  Ba^'  Company  often  hindered 


248  Taxation  in  New  York 

the  growth  of  these  new  communities.  Particularly 
was  tjiis  so  in  the  city  of  Edmonton,  the  capital  of 
Alberta,  where  until  1912  the  Hudson's  Bay  Company 
held  a  large  tract  of  land  in  the  very  heart  of  the  city 
and  only  used  it  as  a  pasturage  for  a  herd  of  cattle. 
Therefore  in  1904  Edmonton  was  the  first  city  of  West- 
ern Canada  to  entirely  exempt  improvements  from  tax- 
ation and  make  the  taxable  base  to  consist  wholly  of 
land.  This  was  done  largely  in  an  effort  to  shift  the 
burden  of  taxation  to  the  Hudson's  Bay  Company  and 
other  non-resident  owners  of  land.  In  1909  Winnipeg, 
Manitoba,  exempted  buildings  one-third  so  that  they 
are  only  assessed  for  two-thirds  of  their  value.  The 
same  year  Calgary,  Alberta,  entirely  exempted 
improvements  from  taxation.  In  1910  Vancouver, 
British  Columbia,  abolished  all  taxation  of  improve- 
ments, and  finally  in  1911  Regina  and  Saskatoon,  Sas- 
katchewan, did  likewise. 

For  a  few  years  while  the  boom  lasted  all  these  cities 
experienced  great  prosperity.  But  beginning  in  1913 
and  extending  to  the  present  all  of  Western  Canada 
has  been  experiencing  very  hard  times.  The  single 
taxers  assert  that  the  war  alone  is  the  cause  of  this 
business  depression  and  that  the  new  system  of  taxa- 
tion is  not  at  all  responsible.  However,  a  most  obvious, 
noticeable  effect  is  a  change  in  the  attitude  of  the  peo- 
ple themselves  toward  the  system.  The  harmonious 
hymn  of  praise,  which  formerly  arose  from  Winnipeg 
to  Vancouver,  is  no  longer  heard.  The  owner  of  real 
estate  is  not  now  interested  in  the  claim  that  the  system 
makes  it  easier  for  him  to  build.  It  would  be  economic 
suicide  for  him  to  build  under  existing  conditions. 
What  he  is  concerned  with  is  where  he  can  find  the 
money  to  pay  the  taxes  on  his  holdings.  The  difficulties 
attending  the  collection  of  taxes  have  been  so  great  as 
to  cause  very  serious  concern  to  the  municipal  authori- 
ties. The  arrears  of  taxes  are  growing  larger  each 
year.    There  is  no  way  to  compel  the  owner  of  vacant 


Untaxing  Buildings  249 

land  to  carry  his  land,  and  as  the  tax  on  land  values 
has  been  pushed  beyond  the  limits  of  its  fiscal  capacity 
many  land  owners  are  simply  throwing  up  their  prop- 
erty and  the  municipalities  are  acquiring  vacant  land 
which  they  cannot  sell. 

In  Vancouver,  British  Columbia,  tax  arrears  which 
were  only  $510,106  in  1912  when  the  period  of  pros- 
perity had  reached  its  height,  have  increased  to  $5,038,- 
537  in  1917.  This  is  nearly  a  million  dollars  more  than 
the  total  tax  levy  for  1917,  which  that  year  amounted 
to  $4,369,000. 

There  is  no  doubt  that  sooner  or  later  all  these  cities 
of  Western  Canada  will  return  to  the  system  of  taxing 
improvements  as  well  as  land.  Whatever  the  various 
indirect  social  effects  of  the  system  are,  the  fiscal  diffi- 
culties are  now  so  acute  as  to  demand  all  of  the 
attention. 


CHAPTER  XVI 
UNEARNED    INCREMENT 

As  commonly  understood  unearned  increment  is  anj- 
surplus  value  accruing  to  an  individual  not  by  virtue 
of  sacrifice  or  exertion  on  his  part,  but  by  virtue  of 
his  property  right  to  a  commodity. 

So  much  stress  is  being  laid  at  present  upon  the 
unearned  increment  of  land  that  one  would  be  led  to 
believe  fabulous  fortunes  are  being  made  thereby. 

The  unearned  increment  tax  on  land  was  first 
imposed  in  the  German  colony  of  Kiauchau  in  China 
in  1898.  Admiral  Otto  von  Dederich,  the  German 
commander  in  charge  at  the  time  the  imperial  govern- 
ment took  control  of  this  Asiatic  possession,  was  much 
concerned  regarding  land  speculators,  who  in  other 
Asiatic  colonies  had  bought  up  land  from  the  natives 
at  very  small  sums  and  then  held  it  for  sale  to  Euro- 
peans at  extremely  high  prices.  As  the  home  govern- 
ment was  contemplating  spending  large  sums  in  erect- 
ing government  buildings,  factories,  railroad  stations, 
and  constructing  harbors.  Admiral  von  Dederich  fore- 
saw a  great  rise  in  land  values,  and  he  considered  it 
desirable  for  the  German  government  to  purchase  a 
large  part  of  the  land  and  then  sell  it  to  intending  pur- 
chasers as  might  be  needed.  The  very  day  of  occu- 
pancy, November  14,  1897,  he  issued  a  proclamation 
forbidding  any  transfer  of  land  without  the  authoriza- 
tion of  the  government.  It  afterwards  turned  out  to 
be  impracticable  for  the  government  to  purchase  the 
land  itself,  and  so  Admiral  von  Dederich  contented 
himself  with  obtaining  from  the  native  land  owners  an 
option  on  the  land  at  prices  existing  at  the  time  of  the 
occupation. 

Admiral  von  Dederich  suggested  in  an  official  memo- 
rial to  the  home  government  in  April,  1898,  that  no 

[250] 


Unearned   Increment  251 

future  transfer  of  land  should  be  permitted  without  the 
authorization  of  the  government,  and  also  that  the 
government  was  to  partici2>ate  in  the  profits.  He  knew 
that  the  land  was  bound  to  increase  in  value  because 
of  the  prospective  outlay  by  the  government.  The 
famous  land  ordinance  of  1898  carried  out  the  ideas  of 
Admiral  von  Dederich.  It  was  provided  by  this  land 
ordinance  that  whenever  any  plot  of  land  in  the  colony 
of  Kiauchau  was  sold,  one-third  of  the  increase  in  its 
value,  after  deducting  any  improvements  in  or  on  the 
land  made  by  the  owner,  should  be  paid  to  the  govern- 
ment. This  was  called  the  direct  increment  tax.  In 
case  the  land  was  not  sold,  it  was  to  be  valued  every 
twenty-five  years,  and  one-third  of  any  increase  in  the 
value  was  similarly  to  be  paid  to  the  government. 

As  a  practical  means  of  preventing  land  speculation 
this  unearned  increment  tax  was  a  success,  but  as  a 
revenue  measure  it  did  not  yield  much  tax,  the  greatest 
revenue  being  secured  in  1906  when  the  sum  of  $2,103 
was  secured.    In  1908  it  yielded  nothing. 

The  experiment  at  Kiauchau,  China,  at  once  attracted 
the  attention  of  the  land  reformers  in  Germany.  The 
imperial  government  was  petitioned  by  the  German 
Land  Reform  League  to  extend  the  principal  of  the 
unearned  increment  tax  to  the  other  German  colonies. 
The  success  of  the  unearned  increment  tax  was  empha- 
sized at  the  Colonial  Congress  held  in  Berlin  in  1902. 
As  a  result  of  the  discussion  in  this  congress  the  possi- 
bility of  applying  the  unearned  increment  tax  on  land 
within  Germany  itself  began  to  be  discussed  in  the 
press. 

The  German  situation  was  peculiar.  Its  cities  were 
growing  with  a  rapidity  exceeded  perhaps  nowhere  in 
the  world,  and  there  was  accordingly  great  opportunity 
for  land  speculation.  In  Germany  the  land  tax  was  not 
assessed  on  the  selling  value  of  the  land,  as  in  the 
United  States,  but  on  the  assumed  produce  or  yield. 
As  the  calculation  of  the  estimated  yield  of  the  land 
used  for  agricultural  purposes  was  revised  only  at  long 


252  Taxation  in  New  Yoek 

intervals,  every  fifteen  years  in  Prussia,  the  result  was 
to  offer  every  inducement  to  land  speculators  to  keep 
land  out  of  use  on  the  outskirts  of  the  rapidly  growing 
towns.  This  condition  does  not  exist  in  New  York 
State  where  there  is  an  annual  assessment  of  land. 
While  land  on  the  outskirts  of  the  German  cities  had 
tremendously  increased  in  value,  yet  according  to  its 
assumed  produce  or  yield  it  was  still  being  assessed  as 
so-called  potato  land.  These  circumstances  tended  to 
keep  the  land  idle  as  long  as  possible,  and  as  a  conse- 
quence brought  about  in  German  towns  of  moderate 
size  a  housing  problem  such  as  was  found  nowhere  else 
in  the  civilized  world. 

The  first  German  city  to  introduce  the  unearned 
increment  tax  on  land  was  Frankfort,  which  initiated 
the  system  in  1904.  Cologne  adopted  the  system  in 
1905,  and  Essen  in  1906.  The  system  soon  spread 
thruout  the  empire  and  by  1910  the  unearned  incre- 
ment tax  on  land  was  found  in  about  f ort^^-five  hundred 
cities  and  towns,  including  about  one-fourth  of  the 
entire  population  of  the  countrj^  While  the  tax  varied 
in  its  details  in  the  different  municipalities,  the  funda- 
mental principles  were  everywhere  similar.  All  these 
sepaiate  taxes  were  abolished,  as  the  imperial  gov- 
ernment enacted  an  unearned  increment  tax  on  land  in 
February,  1911.  This  law  replaced  all  former  state 
and  municipal  taxes  of  the  same  kind.  Under  this  law 
fifteen  per  cent,  of  the  tax  went  to  the  empire,  forty 
per  cent,  to  the  locality,  and  the  remaining  ten  per  cent, 
being  reserved  by  each  state  to  cover  the  cost  of 
collection. 

The  unearned  increment  tax  on  land  in  Germany  is 
imposed  only  when  there  is  a  transfer  of  any  property 
interest  in  real  estate  on  the  increase  of  value  which 
occurs  without  the  activity  of  the  owner.  There  are 
numerous  exemptions  and  the  unearned  increment  is 
defined  as  being  the  difference  between  the  purchase 
price  and  the  selling  price.  The  rate  of  the  tax  depends 
on  the  percentage  of  the  unearned  increment  to  the 


Unearned   Increment  253 

purchase  price  of  the  property  plus  the  cost  of  improve- 
ments and  other  additions.  Thus  if  the  increment  of 
value  is  ten  per  cent,  the  tax  is  ten  per  cent,  of  the 
increment. 

After  two  year's  experience  with  this  law  the 
imperial  government  relinquishes  its  quota  of  the 
unearned  increment  tax  in  1913,  leaving  the  total  levy 
to  the  local  and  state  governments.  The  yield  proved 
much  less  than  was  expected,  the  imperial  govern- 
ment receiving  10,069,340  marks  ($2,396,502.92)  the 
first  year  and  20,021,897  marks  ($4,765,211.49)  the 
second  year  the  law  was  in  operation. 

In  1909  an  unearned  increment  tax  law  was  enacted 
in  England.  As  in  Germany,  land  in  England  was  not 
taxed  on  its  selling  value  as  is  done  in  the  United 
States,  but  upon  its  rental  value.  In  England  there  are 
many  large  estates  utilized  for  purposes  of  pleasure 
and  these  have  no  rental  value.  Land  that  was  vacant 
was  frequently  not  taxed  at  all.  The  English  land 
owners  were  in  a  position  very  different  from  the 
American  land  owners. 

Only  increment  value  of  land  over  ten  per  cent,  is 
taxable,  and  the  tax  at  the  rate  of  twenty  per  cent,  is 
payable  as  follows :  Upon  the  sale  of  land  or  any 
interest  therein ;  upon  a  lease  of  land  for  a  period  of 
more  than  fourteen  years ;  upon  the  passing  of  land  to  a 
new  owner  by  death ;  and  every  fifteen  years  upon  land 
which  does  not  change  hands.  In  computing  this  tax 
the  original  site  value  is  first  determined  and  what- 
ever increase  has  taken  place  over  this  original  site 
value  becomes  the  taxable  unearned  increment.  The 
difficulty  of  obtaining  the  original  site  value  of  all  land 
in  England  is  of  stupendous  magnitude.  Some  estates 
have  remained  in  one  family  for  hundreds  of  years. 
The  valuation  books  and  maps  of  land  prepared  by 
the  government  rival  the  famous  Domesday  book  of 
the  eleventh  century.  At  first  the  yield  from  these 
unearned  increment  taxes  have  been  small,  altho  in 
time  they  are  expected  to  yield  a  substantial  revenue. 


254  Taxation  in  New  York 

All  of  the  revenue  collected  goes  to  the  state  and  not 
to  the  locality. 

The  system  of  land  taxation  in  the  United  States  is 
superior  to  that  found  abroad.  Whether  our  system 
is  the  result  of  accident  or  has  been  caused  by  economic 
conditions,  it  is  based  on  the  capital  or  selling  value  of 
land  and  not  upon  its  rental  value.  If  this  system  of 
assessing  land  at  its  capital  or  selling  value  had  been 
developed  in  Grermany  and  England  it  is  doubtful  if 
any  unearned  increment  tax  would  ever  have  been 
imposed  in  those  countries.  Eeal  estate  under  th^ 
Feudal  system  existing  in  Europe  was  rarely  bought 
and  sold,  so  that  practically  the  only  method  of  ascer- 
taining the  value  of  the  land  was  by  taking  account  of 
its  rents. 

The  first  unearned  increment  tax  adopted  by  any 
taxing  authority  on  this  continent  was  that  adopted  by 
the  Province  of  Alberta  in  the  Dominion  of  Canada  on 
October  25,  1913.  The  idea  was  obtained  from  the 
famous  Lloyd-George  Budget  of  1909,  which  imposed 
the  unearned  increment  tax  in  England.  In  Alberta 
five  per  cent,  of  the  increases  in  land  values  are  appro- 
priated by  the  provincial  treasury.  The  law  is  so 
drawn  that  only  in  rare  instances  is  the  rate  applied 
to  other  than  urban  lands.  This  means  that  farm 
lands  are  practically  exempt  from  the  unearned  incre- 
ment tax.  In  this  respect  it  differs  widely  from  the 
unearned  increment  tax  of  England,  which  was  im- 
posed largely  to  reach  the  large  estates  of  the  nobility, 
whose  holdings  are  mostly  in  the  country  districts. 

At  the  time  the  unearned  increment  tax  was  imposed 
in  Alberta  there  was  an  unusual  development  in  West- 
ern Canada.  There  Avas  a  rush  of  settlers  to  this  new 
region,  villages  and  cities  were  springing  up  over 
night,  and  nearly  everyone  was  speculating  in  build- 
ing lots  which  were  advancing  rapidly  in  priee.  Even 
the  common  workingman  bought  a  building  lot  on 
speculation  making  a  part  pa^Tnent  on  the  purchase 
price  and  hoped  in  a  very  short  time  to  sell  it  again  at 


Uneaened   Increment  255 

double  what  he  paid  for  it.  Everyone  seemed  to  be 
growing  rich  in  this  mad  game  of  speculation,  and  the 
provincial  government  of  Alberta  felt  that  it  was 
entitled  to  a  share  of  the  profits  which  it  would  obtain 
thru  an  unearned  increment  tax.  But  a  widespread 
depression  set  in  soon  after  the  enactment  of  this  law, 
so  that  the  yield  so  far  has  been  very  small.  The 
amount  collected  in  1917  amounted  to  only  $62,902. 
Professor  Haig  mentions  people  who  paid  $1,000  for  a 
building  lot  during  the  boom  times  who  couldn  't  obtain 
$500  for  their  lot  now.  It  can  readily  be  seen  that 
wdth  land  decreasing  in  value  instead  of  increasing 
there  can  not  be  much  revenue  secured  from  an 
unearned  increment  tax.  C.  R.  Mitchell,  the  provin- 
cial treasurer  of  Alberta,  reported  in  1918  that  the 
principal  reason  why  the  yield  from  the  unearned 
increment  tax  had  been  so  small  was  that  the  assess- 
ment of  1913  was  taken  as  the  basis  from  which  the 
unearned  increment  was  to  be  calculated  and  as  the 
assessment  of  1913  was  the  highest  on  record  there  had 
been  few  sales  of  land  at  an  increase  over  the  assess- 
ment of  1913.  The  original  act  of  1913  has  since  been 
amended  so  that  where  property  is  sold  at  a  less  sum 
than  the  1913  assessment,  and  again  resold  at  an 
advance  in  price  over  the  last  sale,  the  province  col- 
lects a  percentage  of  the  increment  notwithstanding 
the  fact  that  these  two  sales  took  place  for  a  considera- 
tion below  the  1913  assessment.  No  other  province  of 
Canada  has  followed  the  lead  of  Alberta  in  imposing 
an  unearned  increment  tax. 

The  single  taxers  are  loudly  calling  for  an  unearned 
increment  tax  in  this  country  and  even  Mayor  William 
Jay  Gaynor's  commission  appointed  in  1910  to  con- 
sider new  sources  of  revenue  advocated  such  a  tax  for 
the  City  of  New  York.  In  the  short  sketch  just  given 
of  the  history  of  the  unearned  increment  tax  in  other 
countries  one  outstanding  fact  is  plainly  visible,  and 
that   is   that  the   revenue   produced   is   insignificant. 


256  Taxation  in  New  York 

Another  objection  to  this  tax  worth  considering  is  that 
it  will  increase  the  problems,  perplexities  and  temp- 
tations, of  which  the  assessor  is  the  victim.  The  deter- 
mination of  the  unearned  increment  in  land  values  is  a 
very  difficult  matter.  It  is  work  of  a  highly  technical 
nature  and  will  require  an  expensive  corps  of  work- 
ers. When  it  is  realized  that  the  revenue  received  will 
be  very  small  one  might  well  ask,  will  it  pay? 

There  are  so  many  mouth-filling  phrases  being  used 
concerning  unearned  increment  and  community  made 
land  values  that  it  is  well  to  stop  and  analyze  just  what 
is  meant.  The  single  taxers  assert  that  when  land 
increases  in  value  the  community  has  made  that 
increase  and  the  community  is  entitled  to  the  increase 
thru  some  form  of  tax:ation.  But  political  economists 
tell  us  that  what  makes  value  is  demand.  If  people 
should  spend  their  time  making  things  for  which  there 
is  no  demand  these  things  would  be  valueless.  The 
reason  land  is  more  valuable  in  the  city  than  in  the 
country  is  that  there  is  more  demand  for  land  in  the 
city  than  in  the  country.  Land  is  more  valuable  in 
some  sections  of  the  city  than  in  other  sections  because 
there  is  more  demand  for  land  in  those  sections.  The 
more  demand  there  is  for  land  the  more  valuable  will 
it  become.  While  the  owner  of  the  land  has  not  created 
the  demand  neither  has  the  owner  of  any  other  com- 
modity created  the  demand  for  that  commodity. 

A  farmer  raises  potatoes.  In  ordinary  years  he 
receives  one  dollar  a  bushel  for  his  potatoes  which  is  a 
fair  return  for  his  capital  and  labor.  But  an  extraor- 
dinary year  occurs  when  his  neighbors'  potato  crops 
are  failures  but  his  crop  of  potatoes  is  as  large  as 
usual.  Theie  is  now  an  enormous  demand  for  his 
potatoes  which  demand  he  did  not  create  and  he  sells 
his  potatoes  for  five  dollars  a  bushel.  His  capital 
investment  was  no  more,  neither  was  his  labor  any 
more  than  in  previous  years.  But  his  potatoes  have 
increased  tremendously  in  value   on  account  of  the 


Unearned  Increment  257 

great  demand.  Can  it  be  said  that  he  has  earned  that 
increase  or  has  not  a  large  part  of  that  increase  been 
unearned?  If  one  dollar  a  bushel  was  a  fair  return  for 
his  capital  and  labor  in  previous  years  then  four  dol- 
lars of  the  present  value  of  a  bushel  of  potatoes  is 
unearned  increment. 

Adolphus  Busch,  founder  of  the  Anheuser-Busch 
Brewery  at  Saint  Louis,  Missouri,  died  in  1913  leaving 
an  estate  valued  at  from  seventy  to  one  hundred  mil- 
lion dollars.  For  a  number  of  years  he  had  been  draw- 
ing a  very  large  salary  and  when  he  died  he  left  this 
great  property  value.  How  can  a  man  in  the  short 
time  of  fifty  years  leave  accumulated  values  of  such 
millions?  Is  there  not  an  unearned  increment  in  the 
case  of  Mr.  Busch 's  accumulations'?  Certainly  there 
is.  Mr.  Busch  did  not  earn  it,  and  if  he  did  not  earn  it, 
it  must  be  unearned,  or  if  earned  those  who  earned  it 
did  not  get  it. 

Andrew  Carnegie  disposed  of  the  Carnegie  Steel 
Company  to  the  late  J.  Pierrepont  Morgan  for  five 
hundred  million  dollars.  How  much  of  that  vast  sum 
was  the  product  of  Mr.  Carnegie's  industry,  and  how 
much  of  it  was  community  made  value  or  unearned 
increment?  How  much  of  the  fortunes  of  the  Roths- 
childs, the  Rockefellers,  the  Vanderbilts,  the  Harri- 
mans  and  hundreds  of  others  are  community  made  or 
unearned  increments?  Only  a  few  years  ago  Henry 
Ford  was  a  poor  machinist.  To-day  he  has  amassed  a 
fortune  of  many  millions  of  dollars  as  a  manufacturer 
of  automobiles  besides  receiving  a  very  large  yearly 
salary.  Has  Henry  Ford  earned  this  vast  fortune  in 
addition  to  the  yearly  salary  lie  has  received?  Are  we 
to  permit  these  great  property  values  to  escape  an 
increment  tax  and  place  such  a  tax  upon  the  increment 
in  land? 

The  advocates  of  an  unearned  increment  tax  on  land 
values  overlook  all  community  made  values  save  one. 
They  spare  the  millionaires  and  billionaires,  who  have 

9 


258  Taxation  in  New  York 

made  the  vast  fortunes  of  the  world  in  steel  shares,  oil 
shares,  railway  securities,  bank  stocks  and  the  hun- 
dred other  forms  of  investment  and  speculation  on  a 
huge  scale,  and  they  seek  to  saddle  all  civic  expense  on 
the  landowners,  who  constitute  a  mere  fraction  of  the 
community,  and  whose  profits  are  infinitesimal  as 
compared  with  those  of  the  bigger  interests. 

Those  who  advocate  the  taxing  of  unearned  incre- 
ment in  land,  justify  such  action  upon  the  ground  that 
such  increment  is  the  product  of  society,  and  society 
should  therefore  take  the  values  it  has  created.  But 
society  plays  a  like  part  in  all  other  forms  of  unearned 
increment.  "We  are  told  that  the  increment  in  land  is 
of  a  different  character  from  the  other  forms  of 
unearned  increment  mentioned.  Yes,  there  is  a  differ- 
ence. It  is  this :  the  dollars  that  the  great  millionaires 
have  to  their  credit  in  the  various  banks,  or  their 
immense  factories,  or  their  stocks  of  goods  on  hand, 
have  been  earned  by  individuals  who  have  not  received 
what  they  have  earned.  While  the  increment  in  land 
is  not  the  product  of  individual  efforts  for  which  com- 
pensation has  not  been  given,  there  are  far  greater 
reasons  for  taxing  the  unearned  increment  in  indus- 
trial enterprises,  than  in  land.  Why  should  the  incre- 
ment in  land  be  taxed  and  increment  in  other  forms 
escape? 

The  only  ground  upon  which  the  taxing  of  unearned 
increment  in  land  can  be  justified  and  the  unearned 
increment  in  other  forms  of  Avealth  be  exempted  is  that 
land  should  not  be  treated  as  property  and  that  no 
individual  has  a  moral  right  to  appropriate  to  himself 
any  part  of  the  earth's  surface  to  the  exclusion  of  all 
others.  This  lands  us  squarely  upon  the  single  tax 
principle  as  advocated  by  Henry  George  in  ''Progress 
and  Poverty,"  the  source  of  the  doctrine  of  the  single 
tax  and  from  which  all  single  taxers  draw  their  inspira- 
tion, Henry  George  says,  ''  private  property  in  land 
is  a  bold,  bare,  enormous  wrong  like  that  of  cliattel 


Unearned   Inceement  259 

slavery."  It  is  upon  this  principle  that  the  taxation 
of  the  unearned  increment  in  land  must  stand  or  fall. 
In  1915  according  to  the  annual  report  of  the  depart- 
ment of  taxes  and  assessments  the  land  value  of  the 
land  in  New  York  City  was  $4,643,414,776,  but  two 
years  later  according  to  the  department  of  taxes  and 
assessments  the  land  value  of  the  land  in  New  .York 
City  was  $4,561,733,604.  Here  is  a  decrease  in  the  land 
value  of  over  eighty  million  dollars  in  two  years'  time. 
Where  is  the  unearned  increment  in  this  case? 
Undoubtedly  in  some  sections  of  the  city  land  has 
increased  in  value,  but  it  is  equally  true  that  in  other 
sections  of  the  city  land  has  decreased  in  value.  Now 
if  in  those  sections  of  the  city  where  land  has  increased 
in  value  the  city  takes  those  increases  because  it  is 
unearned  increment  or  community  made  value,  will  the 
city  in  those  sections  where  land  has  decreased  in 
value  reimburse  the  landowners  for  such  decrease, 
because  according  to  the  same  logical  reasoning  the 
community  must  have  decreased  the  landowner's  land 
and  brought  about  unearned  decrement.  It  is  the 
increase  in  land  values  the  advocates  of  this  system 
are  after;  they  are  not  concerned  about  the  decrease 
in  land  values. 

In  1888  the  City  of  Albany  constructed  a  viaduct  on 
Hawk  Street  from  Elk  Street  to  Clinton  Avenue,  pass- 
ing over  a  deep  ravine  in  which  extended  Orange 
Street  and  Sheridan  Avenue.  While  this  viaduct  was 
a  great  convenience  to  the  city  as  a  whole  yet  the  prop- 
erty underneath  the  viaduct  in  Orange  Street  and 
Sheridan  Avenue  was  damaged  and  decreased  in  value. 
Still  the  city  did  not  recompense  these  landowners  for 
the  decreased  value  of  their  land.  It  is  very  plain  that 
the  comnmnity  made  the  decrease  and  not  the  land- 
owners themselves.  If  there  had  been  an  increase  in 
land  values  the  single  taxers  would  have  claimed  the 
increase  belonged  to  the  city. 

The  advocates  of  the  taxation  of  unearned  increment 
in  land  values  tell  us  that  it  will  prevent  land  specula- 


260  Taxation  in  New  York 

tion.  The  man  who  speculates  in  steel  stocks  is 
respected  and  counted  a  good  citizen.  The  man  who 
speculates  in  railroad  securities  moves  in  the  best  of 
society.  But  the  man  who  speculates  in  land  commits 
a  reprehensible  act.  He  may  take  the  risk  of  the  com- 
munity in  opening  up  new  tracts  on  the  outskirts  of  the 
city  and  building  up  the  suburbs,  but  for  him  we  must 
have  only  words  of  censure.  Speculation  has  its  evils 
and  these  should  be  condemned.  But  speculation  also 
has  its  good  features.  The  farmer  is  the  greatest  specu- 
lator of  all.  He  takes  the  greatest  chances  and  incurs 
the  most  risks.  When  he  sows  his  seed  in  the  spring  he 
never  knows  what  the  future  has  in  store  for  him.  He 
has  to  take  great  chances  with  droughts,  hailstorms, 
insect  pests  and  numerous  other  obstacles.  His  crop 
may  be  a  total  failure  from  no  fault  of  his  own.  Yet 
year  after  year  he  takes  the  same  risks  and  we  can  not 
but  be  thankful  to  him  for  his  speculation  with  nature. 
But  for  the  farmer's  speculation  we  would  have  no 
food  to  eat  or  clothes  to  wear- 

The  taxation  of  the  unearned  increment  in  land 
values  is  only  another  form  of  the  system  advocated  by 
the  single  taxers  of  setting  certain  classes  of  the  coun- 
try against  certain  other  classes.  They  assert  that  the 
single  tax,  exempting  improvements  from  taxation, 
and  the  taxation  of  the  unearned  increment  in  land 
values,  will  untax  industry,  and  be  a  great  boon  to  the 
manufacturer,  to  the  merchant,  and  to  the  working- 
man.  If  this  is  true  it  will  mean  the  shifting  of  the  tax 
burden  upon  the  real  estate  owners  in  the  cities  and  the 
farmers  in  the  country.  It  would  be  class  legislation  of 
the  worst  kind.  So  far  but  little  progress  has  been 
made  in  this  propaganda.  The  manufacturer,  the  mer- 
chant, and  the  workingman,  are  too  patriotic  to  lend 
their  assistance  to  any  such  system  of  dishonor  and 
dishonesty.  These  classes  are  willing  to  bear  their 
share  of  the  burden  that  will  make  this  government  the 
best  government  on  the  face  of  the  earth. 


CHAPTER  XVII 

INCOME  TAXES 

Income  taxes  have  come  into  the  forefront  of  public 
discussion  with  comparative  rapidity.  Everywhere 
there  seems  to  be  a  trend  toward  income  taxes.  Eng- 
land seems  to  have  been  the  pioneer  in  the  imposition 
of  income  taxes.  Its  first  income  tax  was  imposed  in 
1799  as  a  war  measure  during  the  Napoleonic  Wars 
when  there  was  a  time  of  great  stress.  The  Bank  of 
England  had  suspended  specie  payments,  and  a  French 
invasion  under  General  Hoche  seemed  imminent.  If 
England  was  to  continue  a  successful  prosecution  of 
the  war  more  revenue  would  have  to  be  raised  and  it 
was  at  this  time  that  William  Pitt  the  younger,  the 
prime  minister  of  England,  introduced  his  first  income 
tax  measure.  The  taxpayers  were  divided  into  three 
categories.  In  the  first  class  were  comprised  the  pre- 
sumable wealthier  taxpayers,  who  owned  establish- 
ments consisting  of  carriages,  men  servants,  or  horses. 
The  second  class  of  taxpayers  included  those  who,  while 
not  keeping  any  such  establishments,  had  been  assessed 
on  their  houses,  windows,  clocks  or  watches.  The  third 
class  comprised  the  presumably  poorest  individuals 
who  paid  only  on  lodgings  or  shops.  Different  rates 
were  applied  to  the  different  classes  of  taxpayers. 
The  measure  was  imposed  for  only  the  duration  of  the 
war,  but  even  under  these  circumstances  it  aroused  a 
great  deal  of  opposition.  Some  maintained  that  the 
law  was  the  offspring  of  Robespierre.  At  a  public 
meeting  held  in  London  to  urge  the  repeal  of  the  tax 
one  speaker  s?aid  that  if  the  income  tax  was  necessary 
to  save  the  country  it  would  be  better  to  have  the  coun- 
try go  than  to  endure  the  tax.  Even  Pitt  was  mobbed 
on  his  passage  to  Saint  Paul's.  The  measure  was 
called  inquisitorial,  tyrannical  and  unjust.    It  was  only 

[261] 


262  Taxation  in  New  Yoek 

by  appealing  to  tlu^  patriotism  of  the  country  that  Pitt 
was  able  to  secure  its  enactment. 

When  the  Battle  of  Waterloo  finally  assured  peace, 
every  one  supposed  that  the  government  would  now 
abandon  the  income  tax.  Pitt  was  no  longer  at  the 
helm  in  England,  and  Lord  Sidmouth,  the  new  prime 
minister,  desired  to  continue  the  income  taxes  a  few 
years  more  on  account  of  the  immense  national  debt 
incurred  during  the  war  and  the  enormous  increase  in 
governmental  expenditures.  But  Parliment  would  have 
none  of  it  and  so  on  March  18,  1816,  the  income  tax 
law  Avas  repealed. 

But  the  repeal  of  the  income  tax  left  a  gap  in  the 
revenues  which  it  became  necessary  to  make  good  by 
imposing  new  taxes-  The  great  mass  of  these  new 
revenues  consisted  of  burdensome  indirect  taxes,  and 
before  long  England  was  gtoaning  under  a  heavy  load. 
The  situation  Avas  well  portrayed  by  Sydney  Smith  in 
an  article  in  the  ''  Edinburg  Review,"  when  he  said: 

"  Taxes  upon  every  article  which  enters  into  the 
mouth  or  covers  the  back  or  is  placed  under  the  foot. 
Taxes  upon  everything  which  it  is  pleasant  to  see,  hear, 
feel,  smell  or  taste.  Taxes  upon  warmth,  light  and 
locomotion.  Taxes  on  everything  on  earth  or  under 
the  earth,  on  everything  that  comes  from  abroad  or  is 
grown  at  home.  Taxes  on  the  raw  material,  taxes  on 
every  fresh  value  that  is  added  to  it  by  the  industry  of 
man.  Taxes  on  the  sauces  which  pamper  man's  appe- 
tite an.d  the  drug  w^hich  restores  him  to  health ;  on  the 
ermine  which  decorates  the  judge,  and  the  rope  which 
hangs  the  criminal;  on  the  poor  man's  salt,  and  the 
rich  man's  spice;  on  the  brass  nails  of  the  coffin  and 
the  ribbons  of  the  bride.  The  schoolboy  whips  his 
taxed  top ;  the  beardless  youth  manages  his  taxed  horse 
with  a  taxed  bridle,  on  a  taxed  road;  and  the  dying 
Englishman,  pouring  his  medicine,  which  has  paid 
seven  r)er  cent.,  into  a  spoon  which  has  paid  fifteen  per 
cent.,  flings  himself  back  upon  a  chintz  bed  which  has 


Income   Taxes  263 

paid  twenty-two  per  cent.,  and  exj^ires  in  the  arms  of 
an  apothecary  who  has  paid  a  license  of  one  hundred 
pounds  for  the  privilege  of  putting  him  to  death.  His 
whole  property  is  then  immediately  taxed  from  two  to 
ten  per  cent.,  beside  the  probate  judge's  fees  demanded 
for  burying  him  in  the  chancel ;  his  virtues  are  handed 
down  to  posterity  on  taxed  marble,  and  he  will  then  be 
gathered  to  his  fathers  to  be  taxed  no  more." 

Even  in  spite  of  all  these  burdensome  indirect  taxes 
the  government  was  unable  to  make  both  ends  meet 
and  on  account  of  a  growing  deficit  there  was  a  con- 
tinued agitation  for  the  re-imposition  of  the  income 
tax  laAv.  At  last  in  1842  something  had  to  be  done  and 
so  for  a  three-year  period  the  income  tax  law  was 
re-imposed-  It  turned  out  to  be  more  productive  than 
had  been  anticipated,  and  when  the  law  expired  in  1845 
it  was  re-imposed  for  three  years  more.  In  1848  it  was 
re-imposed  for  another  three-year  period,  and  finally 
in  1851  the  income  tax  became  permanent  in  England. 
In  1909  David  Lloyd-George  said:  "  The  income  tax, 
imposed  originally  as  a  temporary  expedient,  is  now 
in  reality  the  center  and  sheet  anchor  of  our  financial 
system. ' ' 

The  fame  of  England's  success  wdth  the  income  tax 
spread  to  the  continent  of  Europe.  In  1873  the  class 
tax  in  Prussia  was  so  amended  as  really  to  become  an 
income  tax.  Eighteen  years  later  the  old  class  tax 
was  entirely  abolished  and  a  permanent  income  tax 
substituted.  In  Saxony  the  income  tax  had  become  the 
chief  tax  in  1878.  All  the  twenty-five  states  of  Ger- 
many, except  Bavaria  and  the  two  Mecklenburgs,  have 
adopted  the  income  tax.  In  1864  Italy  adopted  the 
income  tax.  But  in  France  the  opposition  to  the  income 
tax  has  been  ver>^  determined  and  it  was  not  until  1914 
that  it  was  finally  adopted.  This  may  seem  singular 
to  many,  but  a  short  study  of  French  history  Avill  dis- 
close the  reason.  An  income  tax  was  about  to  be 
adopted  by  the   second   republic  established  in   1848, 


264  Taxation  in  New  York 

but  the  overthrow  of  the  second  republic  by  Napoleon 
III  put  a  stop  to  income  tax  agitation  in  that  country. 
The  third  republic  came  into  being  in  1870  upon  the 
fall  of  Napoleon  III.  At  first  it  was  but  a  temporary 
expedient  because  the  Monarchists,  split  into  two  fac- 
tions known  as  the  Legitimists  and  Orleanists,  and  the 
Bonapartists,  could  not  agree  among  themselves  as  to 
the  form  of  government.  The  Republican  leaders  were 
very  cautious  at  first  and  desired  to  take  no  radical 
action  until  the  republic  became  firmly  established- 
The  agitation  for  an  income  tax  in  France  during  the 
third  republic  has  been  carried  on  largely  by  the 
socialists  and  radicals. 

When  we  come  to  our  own  country  we  find  that  an 
income  tax  was  discussed  during  the  War  of  1812  and 
was  recommended  by  Alexander  James  Dallas,  the 
secretary  of  the  treasury,  in  January  1815.  Had  the 
war  lasted  a  few  months  longer  there  is  every  prob- 
ability that  an  income  tax  would  have  been  imposed, 
but  the  conclusion  of  peace  made  any  further  resort 
to  internal  taxes  unnecessary. 

With  the  outbreak  of  the  Civil  War  in  1861  funds  to 
carry  on  the  war  became  an  imperative  necessity  and 
upon  the  recommendation  of  Salmon  Portland  Chase, 
the  secretary  of  the  treasury.  Congress  enacted  a 
national  income  tax  law  in  1862.  It  was  amended  in 
1864  and  then  repealed  in  1872.  There  was  quite  a 
contest  in  Congress  for  the  retention  of  the  income 
tax  law,  but  as  it  was  originally  passed  as  a  temporary 
war  measure,  to  be  repealed  with  the  conclusion  of  the 
war,  many  senators  and  congressmen  felt  that  they 
would  not  be  keeping  faith  with  the  people  unless  they 
repealed  the  measure.  The  Civil  War  income  tax  act 
imposed  a  tax  of  five  per  cent,  on  incomes  over  ten 
thousand  dollars,  three  per  cent,  on  incomes  from  six 
hundred  to  ten  thousand  dollars,  and  exempted  all 
incomes  under  six  hundred  dollars  from  taxation.  As  a 
revenue  producer  it  was  a  financial  success  and  brought 


Income   Taxes  265 

into  the  United  States  treasury  many  millions  of 
dollars. 

In  1894  Congress  enacted  a  new  income  tax  law 
wherein  all  incomes  under  four  thousand  dollars  were 
to  be  exempt  from  taxation.  This  was  a  most  liberal 
exemption  from  the  Civil  War  measure  when  only 
incomes  under  six  hundred  dollars  were  exempt.  In 
1895  the  Supreme  Court  of  the  United  States  declared 
this  income  tax  law  unconstitutional  because  it  was 
not  apportioned  according  to  the  rule  of  direct  taxa- 
tion. Attorney-General  Richard  Olney  in  his  argu- 
ment before  the  Supreme  Court  contended  that  income 
taxes  were  not  direct  taxes  but  were  indirect  taxes  and 
so  did  not  come  under  section  four  of  Article  I  of  the 
United  States  constitution  which  says :  ' '  No  capita- 
tion, or  other  direct,  Tax  shall  be  laid  by  Congress, 
unless  in  Proportion  to  the  Census  or  Enumeration 
herein  before  to  be  taken. ' '  Whatever  else  may  be  said 
in  regard  to  the  decision  of  the  Supreme  Court  in  1895 
it  at  least  cleared  up  the  ambiguity  as  to  whether 
income  taxes  were  direct  or  indirect  taxes-  From  now 
on  they  must  be  understood  as  direct  taxes. 

An  agitation  now  began  to  have  the  constitution 
of  the  United  States  amended  so  that  Congress  could 
enact  an  income  tax  whenever  it  saw  fit.  At  last  in 
1913  the  Legislatures  of  two-thirds  of  the  states  of  the 
Union  had  ratified  what  is  now  the  sixteenth  amend- 
ment to  the  federal  constitution  which  reads  as 
follows : 

**  The  Congress  shall  have  power  to  lay  and  collect 
taxes  on  incomes,  from  whatever  source  derived,  with- 
out apportionment  among  the  several  States,  and  with- 
out regard  to  any  census  or  enumeration." 

Upon  the  adoption  of  this  amendment  Congress  pro- 
ceeded to  impose  another  national  income  tax  act  which 
is  still  in  force.  Under  the  present  act  the  exemptions 
are  one  thousand  dollars  for  unmarried  and  two  thou- 
sand dollars  for  married  persons.  The  rates  are  pro- 
gressive and  vary  for  different  amounts  of  income. 


266  Taxation  in  New  York 

For  the  fiscal  year  ending  June  30,  1918,  tlie  United 
States  government  collected  from  this  income  tax  act 
in  connection  with  the  tax  on  excess  profits  the  sum  of 
$839,378,067  in  the  State  of  New  York.  This  vast  sum 
was  collected  with  ease  and  precision.  The  question 
now  arises  why  should  not  the  State  of  New  York  also 
have  an  income  tax  act  which  could  be  made  to  pay  all 
the  expenses  of  the  State  and  local  government?  In 
1917  the  total  revenue  receipts  for  all  purposes  both 
State  and  local  which  includes  direct  taxes  and  all 
sources  of  revenue  from  indirect  sources,  was  $390,- 
338,374.  But  the  national  government  collects  in  this 
State  over  twice  that  amount  from  an  income  tax  and 
does  it  with  less  expense  and  trouble  than  the  State  and 
local  governments  are  spending  in  barely  obtaining 
sufficient  revenue  to  keep  them  going.  Would  it  not  be 
better  for  the  State  government  to  collect  thru  an 
income  tax  sufficient  revenue  and  then  apportion  it  out 
to  the  counties,  cities,  towns,  villages,  and  school  dis- 
tricts? If  the  United  States  government  can  collect 
over  eight  hundred  million  dollars  in  this  State  from 
an  income  tax  there  is  no  reason  why  the  State  govern- 
ment can  not  also  collect  over  eight  hundred  million 
dollars  from  an  income  tax. 

But  property  has  had  to  bear  the  burden  of  taxation 
in  this  State  so  many  years  that  many  will  consider 
any  attempt  to  exempt  property  and  tax  incomes  as 
revolutionary.  Going  back  to  the  fathers  we  find  that 
John  Jay,  who  wrote  the  State's  first  constitution  in 
1777,  ex])ressed  himself  in  regard  to  taxation  as  fol- 
lows: "  Whether  taxation  should  extend  only  to  prop- 
erty, or  only  to  income,  are  points  on  which  opinions 
have  not  been  uniform.  T  am  inclined  to  think  that 
both  should  not  be  taxed."  According  to  this  state- 
ment John  Jay  believed  that  if  the  State  taxed  incomes 
it  should  exempt  property  from  taxation-  And  John 
Jay  WMS  the  originator  of  the  State's  fundamental 
laws. 


Income   Taxes  267 

Senator  John  Sherman  of  Ohio  in  opposing  in  the 
United  States  Senate  in  1870  tlie  repeal  ol"  the  Civil 
War  national  income  tax  act  stated  that  property  is 
not  a  proper  test  of  taxes.  Is  this  not  true  '!  This  is  a 
government  of  persons,  not  a  government  of  property. 
We  elect  persons  to  office,  not  property.  Property  owes 
no  duty  to  pay  taxes,  but  persons  do. 

The  benefit  theory  of  taxation  has  been  well  nigh 
abandoned  by  all  students  of  taxation.  Under  such  a 
theory  people  were  supposed  to  pay  taxes  according  to 
the  benefit  or  protection  they  received  from  the  govern- 
ment. Carrying  this  theory  to  its  logical  conclusion 
the  poor  man  should  be  taxed  more  than  the  rich  man, 
because  he  is  less  able  than  the  rich  man  to  protect  him- 
self. The  poor  man  sends  his  children  to  a  public 
school,  the  rich  man  resorts  to  a  private  school;  the 
poor  man  depends  for  fire  protection  or  sanitation 
upon  the  efforts  of  government,  the  rich  man  avails 
himself  of  the  services  of  the  best  appliances  and  the 
foremost  experts ;  the  poor  man,  in  the  last  instance, 
resorts  to  poor  relief  or  state  pensions;  the  rich  man 
needs  no  such  assistance.  The  benefit  theory  which 
would  practically  result  in  placing  greater  burdens 
ujjon  the  poor  man  than  upon  the  rich  man  is  defective 
and  unworthy  of  our  supjiort. 

An  abandonment  of  the  benefit  theory  was  when  the 
State  did  away  with  the  odious  rate  bills  and  made  the 
public  schools  of  the  State  absolutely  free  to  all  chil- 
dren between  the  ages  of  five  and  eighteen.  When  the 
free  school  peoy)le  were  making  their  heroic  fight  dur- 
ing the  middle  of  the  last  century  many  people  were 
known  to  exclaim,  **  Why  should  I  pay  school  taxes  to 
educate  someone  else's  children.  I  receive  no  benefit 
from  their  education."  The  benefit  theory  still  lingers 
in  our  special  assessments.  But  special  assessments 
should  be  al)olished. 

The  ])aym('iits  made  by  the  individual  to  the  goveni- 
nieiit  are  exceediiiglv  divers  in  character.    The  s])ecial 


268  Taxation  in  New  York 

benefit  of  the  government  to  the  individual  is,  in  most 
cases,  even  not  measureable;  for  the  distinguishing 
characteristic  of  modern  civilization  is  the  spread 
thruout  the  community  of  the  results  of  good  govern- 
ment which  make  for  the  common  welfare.  The  state 
is  not  a  joint  stock  company  where  the  members  draw 
dividends  in  the  shape  of  benefits.  Rather  the  state 
is  one  large  family  where  all  are  brethern  and  ani- 
mated, if  they  are  patriots,  by  the  same  ideals  and  by 
the  same  fine  sense  of  co-operation  in  the  common 
interest. 

We  pay  taxes  not  because  we  get  benefits  from  the 
state,  but  because  it  is  as  much  our  duty  to  support  the 
state  as  to  support  ourselves  or  our  family ;  because,  in 
short,  the  state  is  an  integral  part  of  us.  The  duty  of 
supporting  and  protecting  the  state  is  born  in  us.  That 
is  why  we  shoulder  a  musket  and  go  to  war  when  the 
state  needs  our  services.  The  state  is  as  necessary  to 
the  individual  as  the  air  he  breathes.  His  every  action 
is  conditioned  by  the  fact  of  its  existence.  He  does  not 
choose  the  state,  but  is  born  into  it;  it  is  interwoven 
with  the  very  fibers  of  his  being,  and  in  the  last  resort 
of  danger  he  is  called  upon  to  give  to  the  state  his  very 
life  upon  the  battlefield. 

Most  of  the  actions  of  the  government  interest  the 
whole  community  and  from  which  the  individual 
receives  no  benefit,  except  what  accrues  to  him  inci- 
dentally as  a  member  of  the  community.  If  the  gov- 
ernment undertakes  a  war,  no  one  citizen  is  benefited 
more  than  another.  If  the  government  spends  money 
for  cleaning  the  streets,  for  erecting  tribunals,  or  for 
patrolling  the  city  by  police,  it  cannot  be  claimed  that 
any  one  individual  receives  a  measurable,  special  bene- 
fit; all  are  equally  interested  in  good  government. 
When  payment  is  made  for  these  general  expenditures 
—  and  such  payment  is  taxation  —  the  principle  of  con- 
tribution is  no  longer  that  of  benefits  or  of  give  and 
take,  but  of  ability,  faculty,  capacity. 


Income   Taxes  269 

This  brings  us  to  the  modern  theory  of  taxation,  the 
ability  theory  —  that  is  that  every  man  must  support 
the  government  to  the  full  extent,  if  need  be,  of  his 
ability  to  pay.  Under  this  theory  the  individual  does 
not  measure  the  benefits  of  state  action  to  himself; 
first,  because  these  benefits  are  quantitatively  unmeas- 
urable  and  secondly,  because  such  measurement  implies 
a  decidedly  erroneous  conception  of  the  relation  of  the 
individual  to  the  state.  The  benefit  theory  of  taxation 
is  very  plausible  and  its  advocates  reason  that  govern- 
mcMit  exists  only  for  the  protection  of  man  and  there- 
fore man  should  contribute  to  the  support  of  the  gov- 
ernment only  according  to  the  protection  or  benefit 
which  he  receives  from  the  government.  But  that  is  a 
very  narrow  view  of  government  which  limits  its  activi- 
ties only  to  the  protection  of  man.  Man  is  a  social, 
reasonable,  and  moral  being  and  for  these  reasons  is 
fitted  for  society.  Laws  are  the  rules  for  regulating 
the  social  actions  of  men  and  law  cannot  exist  without 
government.  Therefore  government  exists  to  regulatQ 
the  intercourse  of  men  with  each  other.  The  earliest 
governments  of  which  we  have  any  knowledge  were 
patriarchal  governments  or  family  governments.  Thus 
our  idea  of  government  has  come  down  to  us  from 
primitive  ages  as  one  large  family.  Family  life  in  its 
broadest  sense  is  something  more  than  the  protection 
of  its  members. 

Having  accepted  the  ability  theory  of  taxation,  what 
is  the  proper  test  of  man's  ability  to  pay  taxes,  his 
property  or  his  income?  In  primitive  communities 
property  to  a  certain  extent  is  a  rough  test  of  ability. 
Every  freeman  is  a  proprietor,  and  all  are  supported 
by  the  produce  of  the  land.  Comparative  equality  of 
wealth  gives  comparative  equality  of  opportimity. 
But  a  change  soon  sets  in.  Society  differentiates  and 
classes  arise  who  support  themselves  not  from  their 
property,  but  from  their  earnings.  He  who  earns  a 
salary  is  just  as  able  to  pay  towards  the  support  of  the 
government  as  one  who  receives  the  same  amount  as 


270  Taxation  in  New  York 

interest  on  a  principal  or  as  profits  on  property.  The 
productiveness  of  property  is  another  element  in  cal- 
culating the  owner's  ability.  Of  two  factory  owners, 
one  may  be  running  full  time  and  making  large  profits ; 
the  other  may  be  compelled  to  keep  his  factory  closed, 
earning  nothing.  Of  two  landowners,  one  may  enjoy  a 
large  product  by  employing  improved  processes;  the 
other,  altho  possessing  equally  as  good  and  valuable 
land,  may  suffer  climatic  reverses  and  produce  far 
less.  Of  two  capitalists,  one  may  be  fortunate  enough 
to  invest  his  property  so  as  to  obtain  large  proceeds : 
the  other  may  put  an  equal  amount  of  property  into  an 
enterprise  which  yields  very  little.  Would  it  be  cor- 
rect to  say  that  the  ability  to  pa)'  taxes  in  these  cases 
is  the  same  for  those  possessing  the  same  amount  of 
property!  Has  not  the  test  of  ability  been  shifted  from 
property  to  product,  proceeds,  earnings,  or  income? 

The  truth  of  this  principle  is  faintly  recognized  in 
the  legislation  of  all  countries  one  step  removed  from 
the  primitive  tax  system.  Some  of  the  medieval  town 
taxes  illustrate  its  application  where  the  earnings  of 
the  artisans  and  tradesmen  were  taxable,  as  evidences 
of  their  ability,  side  by  side  with  the  property  of  others. 
So  too,  the  various  attempts  of  mediaeval  states  to  tax 
the  proceeds  or  rent  of  land,  the  salaries  of  officials  and 
the  products  of  individual  exertion  shows  that  ability 
to  pay  taxes  includes  something  more  than  the  mere 
possession  of  property.  When  we  study  the  early 
legislation  of  the  American  colonies  we  find  the  tax 
law  of  1634  in  Massachusetts  Bay  provided  for  the 
assessment  of  each  man  "  according  to  his  estate  and 
with  consideration  of  all  other  his  abilityes  whatso- 
ever." Other  American  colonies  followed  the  example 
of  Massachusetts  in  striving  to  reach  the  taxpayer's 
income  as  a  test  of  his  al)ility  to  sup])ort  the  govern- 
ment. But  in  New  York  it  never  secured  a  foothold. 
During  the  Dutch  domination  the  tax  system  of  the 
colony  was  composed  almost  entii'ely  of  excises  and 
duties.    When  th(»  Englisli  obtained  control  the  tax  on 


Income   Taxes  271 

property  was  introduced,  but  without  any  additional 
income  tax  as  in  some  of  the  other  colonies. 

The  advocates  of  a  property  tax  assert  that  the 
income  from  property  is  better  able  to  support  the 
government  than  professional  or  individual  earnings. 
Again  they  assert  that  under  an  income  tax  system 
unproductive  property  like  jewelry,  art  collections, 
unimproved  lands,  etc-,  would  be  exempt  and  thus  pay 
nothing  towards  the  support  of  the  government.  To 
begin  with  there  is  an  utter  insignificance  of  this  kind 
of  property  as  compared  with  the  total  national  wealth. 
The  conversion  of  capital  into  unproductive  wealth  of 
itself  destroys  the  revenue,  which  is  the  only  true  fund 
for  the  payment  of  taxes.  No  economist  advocates  the 
payment  of  taxes  from  the  capital  account.  Instead 
taxes  should  always  come  from  revenue,  for  if  taxes 
came  from  the  capital  account  there  would  come  a  time 
when  the  capital'  account  would  be  exhausted  and 
future  sources  of  revenue  to  support  the  government 
would  be  dried  up.  It  is  a  maxim  of  taxation  that  the 
government  should  so  adjust  its  tax  system  as  not  to 
dry  up  future  sources  of  revenue. 

It  is  not  denied  that  if  the  capital  invested  in  unpro- 
ductive property  had  been  invested  in  productive  prop- 
erty and  if  the  tax  was  levied  on  the  product,  the 
owner  would  pay  a  larger  sum.  But  on  the  other  hand, 
his  revenue  would  be  still  greater  and  his  annual  sur- 
plus above  the  tax  would  constitute  an  ever  increasing 
productive  fund.  The  individual's  renunciation  of 
revenue  diminishes  pro  tanto  his  tax  paying  ability. 

The  exemption  of  unimproved  lands  from  taxation 
is  sure  to  arouse  a  hostile  storm  of  criticism.  The  single 
taxers  try  to  make  us  believe  that  there  are  so  many 
vacant  building  lots  in  every  city  that  are  held  out  of 
use  by  land  speculators.  The  housing  problem  of  our 
cities  deserves  careful  study  and  attention.  It  is  a 
lamentable  fact  that  altho  he  can  obtain  assistance  in 
every  way  from  savings  ])anks  and  loan  associations, 
the  individual  rarely  buys  a  building  lot  and  erects  a 


272  Taxation  in  New  York 

home  of  his  own.  The  new  houses  in  our  cities  aro 
mainly  erected  by  speculative  builders  who  either  sell 
or  rent.  But  for  these  speculative  builders  there  would 
be  great  congestion  in  every  city.  To  the  extent  that 
they  relieve  the  housing  situation  —  they  are  bene- 
factors. They  are  not  animated  by  any  hmnanitarian 
motives,  but  consider  only  prospective  profits.  Why 
does  not  the  ordinary  individual  erect  his  own  house 
instead  of  buying  or  renting  one  from  the  speculative 
builder?  The  day  may  come  when  the  municipality 
will  be  obliged  to  erect  houses  and  either  sell  or  rent 
them  to  its  citizens. 

It  is  interesting  to  note  that  the  City  Club  of  New 
York  City  is  advocating  in  1918  a  State  housing  com- 
mission to  investigate  and  report  as  to  the  best 
methods  of  obtaining  adequate  and  proper  housing, 
whether  thru  a  system  of  State  loans  or  otherwise. 

The  property  tax  was  the  first  crude  attempt  to 
attain  a  semblance  of  equity,  and  it  at  first  responded 
roughly  to  the  demands  of  democratic  justice.  In  a 
community  mainly  agricultural,  the  property  tax  was 
not  unsuited  to  the  social  conditions,  but  as  soon  as 
commercial  and  industrial  considerations  came  to  the 
foreground  in  national  or  municipal  life,  the  property 
tax  decayed,  became  a  shadow  of  its  former  self  and, 
while  professing  to  be  a  tax  on  all  property,  has  turned 
out  to  be  a  tax  on  real  estate  only.  Personal  property 
is  practically  exempt  from  taxation.  There  is  undoubt- 
edly three  times  as  much  personal  property  in  the 
state  of  New  York  as  there  is  real  estate,  yet  for  the 
year  1917  real  estate  paid  seventy  per  cent,  of  the 
taxes  and  personal  property  paid  but  thirty  per  cent. 
This  fact  alone  proves  how  inequitable  and  unjust  the 
property  tax  is.  Professor  Edwin  Robert  Anderson 
Seligman,  acknowledged  to  be  the  greatest  authority 
on  taxation  in  this  country,  thus  speaks  of  the  property 
tax  in  his  ''  Essays  in  Taxation  :  " 

''  The  general  property  tax  as  actually  administered 
is  beyond  all  doubt  one  of  the  worst  taxes  known  in  the 


Income   Taxes    ,  273 

civilized  world.  Because  of  its  attempt  to  tax  intangi- 
ble as  well  as  tangible  things,  it  sins  against  the  cardi- 
nal rules  of  uniformity,  of  equality  and  of  universality 
of  taxation,  ...  It  presses  hardest  on  those  least 
able  to  pay.  It  imposes  double  taxation  on  one  man 
and  grants  entire  immunity  to  the  next.  In  short,  the 
general  property  tax  is  so  flagrantly  inequitable,  that 
its  retention  can  be  explained  only  thru  ignorance  or 
inertia.  It  is  the  cause  of  such  crjdng  injustice  that  its 
alteration  or  its  abolition  must  become  the  battle  cry 
of  every  statesman  and  reformer." 

All  the  reports  of  the  different  state  tax  commissions 
emphasize  year  after  year  the  fact  that  personal  prop- 
erty is  not  paying  its  share  of  the  burden  of  taxation. 
But  they  fail  to  emphasize  the  other  fact  just  as  patent 
to  all  observers  that  real  estate  is  pajdng  more  than 
its  share  of  the  burden  of  taxation.  No  one  can  deny 
that  if  certain  people  do  not  pay  their  share  of  the 
tax  burden,  then  certain  other  people  must  be  paying 
more  than  their  share  of  the  tax  burden.  Who  are 
these  people  who  are  paying  more  than  their  share  of 
the  tax  burden?  If  statistics  were  gathered  it  would 
probably  be  found  to  be  the  farmers  in  the  country 
and  the  real  estate  owners  in  the  cities. 

The  advocates  of  income  taxation  contend  that 
under  such  a  system  of  taxation  i:)ersonal  property 
would  not  escape  as  it  does  now.  That  there  is  a 
danger  to  our  democratic  form  of  government  from 
the  fact  that  under  our  property  taxation  a  small 
minority  of  taxpayers  are  paying  the  taxes  which  are 
imposed  bj^  a  large  majority  of  non  taxpayers.  In 
a  democracy  every  citizen  to  be  a  good  citizen  should 
be  a  taxpayer,  and  under  income  taxation  every 
citizen  would  be  a  taxpayer.  Some  of  these  non  tax- 
payers tell  us  that  indirectly  thoy  are  paying  taxes 
thru  the  rent  they  pay,  the  food  and  clotlies  they  buy, 
and  in  other  ways  in  which  they  spend  their  money; 
but  when  asked  to  tell  just  how  much  during  the  past 


274  Taxation  in  New  York 

year  they  have  paid  towards  the  support  of  the  gov- 
ernment, they  are  unable  to  tell.  Under  a  system  of 
income  taxation  they  would  know  just  how  much 
they  are  paying  towards  the  support  of  the  govern- 
ment each  year  and  would  be  interested  in  having 
this  money  well  spent-  Income  taxation  would  thereby 
be  productive  of  better  government. 

Wisconsin  imposed  a  state  income  tax  act  in  1910 
and  it  is  giving  good  satisfaction  and  producing  a 
large  amount  of  revenue.  The  old  assertion  that  an 
income  tax  is  inquisitorial  is  losing  its  force.  Corpora- 
tions are  now  required  to  make  many  financial  reports 
to  different  governmental  agencies.  They  do  not  com- 
plain that  the  government  is  prying  into  their  private 
affairs.  Individuals  now  have  to  make  returns  to  the 
United  States  government  in  regard  to  their  income. 
They  cannot  therefore  object  to  making  a  like  return 
to  the  State  government. 

There  is  no  doubt  that  a  State  income  tax  is  coming. 
The  1915  joint  legislative  committee  on  taxation  after 
a  thoro  investigation  came  to  the  conclusion  that  a 
State  income  tax  was  the  solution  of  New  York's  tax 
problem.  Economic  conditions  have  everywhere 
engendered  a  shifting  of  the  basis  of  taxable  ability, 
and  democracy  has  declared  that  the  best  criterion,  on 
the  whole,  is  to  be  found  in  income.  The  develop- 
ment is  irresistible,  and  the  income  tax  will  come  to 
stay  until  some  new  criterion  of  ability  approves  itself 
to  the  democracy  of  the  future. 

There  has  been  too  much  of  a  failure  to  distinguish 
between  wealth  and  property,  that  is  between  things 
and  their  signs.  Wealth  is  an  economic  term,  while 
property  is  a  legal  expression.  Evidences  of  owner- 
ship are  property,  but  it  may  not  be  wealth.  Nearly 
all  credits  are  property,  but  they  are  not  wealth  in 
the  economic  sense.  A  piece  of  land  worth  $1,000  and 
a  mortgage  upon  it  for  $600  do  not  aggregate  $1,600 
of  wealth  in  the  place  where  the  land  lies  and  in  the 


Income   Taxes  275 

place  where  the  mortgage  is  domiciled.  The  economic 
fact  is  that  the  mortgagor  and  the  mortgagee  together 
own  land  worth  $1,000  and  no  more. 

The  resident  of  Biilfalo  who  purchases  a  bond  of 
a  street  railway  comjjany  in  New  York  City  has  sepa- 
rated his  thousand  dollars  from  Buffalo  and  it  has 
become  part  of  a  railway  in  New  York  City.  x\ltho 
he  himself  remains  in  Buffalo,  his  wealth  has  not 
remained  in  Buffalo;  yet  he  is  liable  to  taxation  in 
Buffalo  as  if  his  wealth  was  still  there.  New  ,York 
City  taxes  the  railway  as  it  is  part  of  the  property  of 
the  metropolis.  But  the  resident  of  Buffalo,  altho 
he  has  parted  with  his  cash,  has  received  in  exchange 
something  which  brings  him  in  an  income.  Under  our 
present  property  system  of  taxation  this  $1,000  of 
wealth  is  liable  to  taxation  twice  as  if  it  was  $2,000; 
but  under  an  income  system  of  taxation  it  would  be 
taxable  but  once. 


INDEX 


Ability  to  pay  theory  of  taxation:  PAGE 

Best  expressed  thru  an   income  tax 269 

Adjutant  general: 

In  charge  of  the  military  affairs  of  the  State 95 

Agricultural   societies : 

Exempted  from  taxation   in   1859 190 

Agricultural  village  communities: 

(Sprang  up  after  the  curtailment  of  the  privileges  of  the  West 

India  Company  and-  of  the  patroons 6 

Aid  to  denominational  schools : 

Forbidden  by  constitution  of  1894 53 

Albany  glass  factory: 

Exempted  from  taxation  in   1796 187 

Alberta,  province  of: 

Unearned  increment  tax  on   land  introduced  in   1913 254 

Ale: 

Tariff  act  of  1787  imposed  a  duty  of  six  pence 19 

Almonds : 

Tariff  act  of  1787  imposed  a  duty  of  one  penny 19 

Alspice : 

Tariff  act  of  1787  imposed  a  duty  of  one  penny 19 

American  geographical  society: 

Called  attention  in  1876  that  mny)^  of  the  State  were  grossly 

erroneous   100 

Anchors : 

Tariff  act  of  1787  imposed  a  duty  of  five  pounds 21 

Anchovies : 

Tariff  act  of   1787   imposed  a  duty  of  seven  pounds  and  ten 

shillings    20 

Anti-rent  agitation : 

Conducted   by  holders  rf  perpetual   leases  during  the   forties 

of  the  nineteenth  century 40 

Assessment  and  equalization : 

Chapter   XI 156-181 

Assessors : 

Directions  as  to  manner  of  making  assessments  in  1774 157 

Were  to  assemble  in  Ulster  County  in   1764  and  agree  as  to 
rule  for  making  assessments 162 

Received    two    shillings    more   per    day    in    Cornwall    than    in 
Haverstraw  and  Orangetown  in  1770 162 

Oath  taken  by  assessors  of  Albany  in  1764 173 

Tribute  paid  to  the  value  of  their  work 181 


278  Index 

Astor,  John  Jacob:  Paok 

Accumulated  his  fortune  in  the  fur  trade 222 

Attorney  general: 

Existed  in  colonial  period S'l 

Auction  duties: 

Used  for  the  construction  of  the  Erie  canal 46 

Axes: 

Tariff  act  of  1787  imposed  a  duty  of  twelve  shillings 20 

Axtell,  William: 

Member  of  the  council  of  the  colony  of  New  York,  attainted 

in   1779 25 

Bank  of  Ithaca: 

Failure  to  work  out  highway  tax  in  1833 73 

Barclay,  Thomas  H. : 

Attainted   in   1779 25 

Barge  canal  act : 

Voted  by  people  in  1903 65 

Battery  park: 

Ceded  to  New  York  City  by  the  State  in  1789 143 

Bayard  and  McEves: 

Donated  2,500  acres  of  land  to  aid  in  the  construction  of  the 

Erie  canal 29 

Bayard,  Robert : 

Attaintetl   in   1779 25 

Bayard,  William: 

Attainted   in   1779 25 

Beaver : 

Export  duty  on 3 

Bedloe's  Island: 

Purchased  by  New  York  City  for  a  pest  house  in  1758 98 

Beef: 

Tariff  act  of  1787  imposed  a  duty  of  five  pounds 21 

Beer: 

Excise    on 3 

Tariff  act  of  1787  imposed  a  duty  of  six  pence 19 

Bellomont,  Governor,  the  Earl  of: 

Application  to,  for  a  ferry  grant  from  Brooklyn 138,  139 

Bellows: 

Tariff  act  of  1787  imposed  a  duty  of  five  pounds 21 

Benefit  theory  of  taxation: 

Illustrated    in    the    rate    bill    system    of    taxation    for    public 
schools    267 

Not  a  proper  method  of  taxation 268 

Would  injure  the  poor  man  and  benefit  the  rich  man 267 

Bergen.  Delegate  Tunis  ft.: 

Of  constitutional  convention   of  1846  in  regard  to  the  Dutch 
language  50 


Index  1^79 

Berlin :  p^OE 

Utilizes  sewage  of  the  city  upon  the  land 116 

Beverwyck : 

Traders  at 6 

Billop,  Christopher  H. : 

Attainted   in   1779 25 

Birkeland,  Professor: 

Inventor  of  electro-chemical  process  for  manufacturing  nitrate 

fertilizers    113 

Birmingham,  city  of: 

Demolished  slum  area  thru  excess  condemnation 210 

Bishop : 

Author  of  history  of  American  manufactures 122 

Black  River  canal: 

Authorized  by  the  Legislature  in  1836 30 

Blank  books: 

Tariff  act   of   1787   imposed   a  duty  of   seven  pounds  and  ten 

shillings    20 

Board  of  health: 

Created  in   1880 93 

Boot  legs : 

Tariff   act   of    1787    imposed   a   duty   of   one   shilling   and    six 

pe"ce    20 

Boots : 

Tariff  act  of  1787  imposed  a  duty  of  one  shilling  and  six  pence.      20 
Bounties : 

Upon  woolen  cloth,  broadcloth,  salt,  wild  animals  and  sugar 

beets   70.     71 

Bowling  Green  park: 

Created  in   1786 I43 

Boyd,  John: 

Loaned  £1,500  by  the  State  in   1705 27 

Boyle,  Governor  Emmet  D. : 

Opinion  concerning  taxation   of  mines 228 

Bridle  bits: 

Tariff  act  of   1787   imposed   a   duty  of  seven  pounds   and  ten 

shillings    oq 

Bridles: 

Tariff  act   of    1787   imposed    a   duty  of   seven   pounds  and   ten 

shillings    oq 

Bright,  John : 

Expression  as  to  the  teachers'  influence .(jj) 

Bright,  Louis  V.: 

Testimony  as  to  Astor  estate 216 

British  North  American  act  of  1867: 

Constituted   Dominion   of  Canada 246 


280  Index 

Broadcloth :  Page 

Bounty  for  manufacture  of 70 

Brooklyn  Rapid  Transit  company: 

Constructed   subways  in  New  York  City  in  conjunction  with 

city    145 

Brouwer  Straate: 

First  street  paved  in  New  Amsterdam 149 

Brushes : 

Tariff  act   of   1 787   imposed   a   duty  of  seven   pounds  and  ten 

shillings    20 

buffalo  burial  groimd: 

Exempted  from  taxation   in   1834 189 

Building  zone  plan : 

Adopted  by  New  York  City.  July'  25,  1916 245 

Bulls: 

To  be  assessed  at  fifteen  dollars  value  by  assessors  in  179&.  ...      16 
Burgomeisters: 

Fine  for  tardiness  and  absence 4 

Busch,  Adolphus: 

Founder  of  the  Anheuser-Busch  brewery  at  Saint  Louis 257 

Butler,  John: 

Attainted   in    1779 25 

Butter : 

Tariff  act  of  1787  imposed  a  duty  of  five  pounds 21 

Caldwell,  James: 

Loaned  £8,000  by  State  in  1795 27 

Purchase  of  public  lands  from  the  State SD 

California : 

Fruit  growers'  excliange 115 

Relative  tax  burdens  of  manufactures  and  agriculture  in  the 

State  in   1906 126 

Canal  tolls: 

Abolished   on   canals  in    1882 33 

Abolished  on  railroads  in   1851 33 

Candles : 

Tariff  act  of  1787  imposed  a  duty  of  five  pounds 21 

Capers : 

Tariff  act  of   1787   imposed  a   duty  of  .seven   pounds  and   ten 

shillings    20 

Carnegie,  Andrew: 

Disposed  of  the  Carnegie  steel  company 257 

Novel  theory  concerning  inheritance  tax 81 

Carriages : 

Tariff  act  of  1787  imposed  a  duty  of  four  to  eight  pounds.  ...      20 

To  be  assessed  at  fifty  dollars  value  by  assessors  in  1799 16 


Index  281 

Cayuga  and  Seneca  canal:  Page 

Authorized  by  the  Legislature  in   1825 29 

To  be  changed  to  a  barge  canal (i.) 

Cemeteries : 

Exempted  from  taxation  in  1875 189 

Central  park: 

Authorized  by  the  Legislature  in  1853 143 

Champlain  canal: 

Construction  began  in  1817 .'50 

Chariots  and  post  chaises: 

Taritr  act  of  1787  imposed  a  duty  of  fifteen  pounds 20 

To  be  assessed  at  seven  hundred  dollars  value  by  assessors  in 

1799   10 

Chase,  Salmon  Portland: 

Secretary  of  the  treasury .  .  .' 264 

Chemung  canal: 

Abandoned  in  1878 62 

Authorized  by  the  Legislature  in  1829 29 

Chenango  canal : 

Abandoned  in  1 878 63 

Authorized  by  the  Legislature  in  18S0 29,     30 

China  ware: 

Tariff  act  of   1787   imposed  a   duty  of  seven  pounds   and  ten 

shillings    20 

Chilton,  George: 

Analysis  of  New  York  City  water  in  1835 140 

Church,  Chief  Justice  Sanford  Elias: 

Denounced  special  assessments  in  1877 201 

City  and  suburban  homes  company  of  New  York  City: 

Houses  fifteen  thousand  people  in  the  boro  of  Manhattan.  .  .  .    243 
Cheese : 

Tariflf  act  of  1787  imposed  a  duty  of  four  pence 19 

Chocolate: 

Tariff  act  of  1787  imposed  a  duty  of  three  pence 19 

City  slaughter  house: 

Source  of  revenue  in  New  Amsterdm 4 

Civil  service  commission : 

Conducts  civil  service  examinations !M 

Civil  War: 

Canal  tolls  increased  enormously  on  account  of  the  closing  of 
the  southern  ports 61 

Cost  of 67.     cs 

Claus,  Daniel: 

Attainted  in  1779 25 

Clergymen : 

E.M-mpt.Ml    from    taxation 186.   1 88 


282  Index 

Clermont,  town  of:  Page 

First  legislative  enactment  in  regard  to  a  common  school....      49 
Clinton,  Governor  DeWitt : 

L'rged   the  necessity   of  an  authentic  and  official  map  of  the 

State  in    1827 100 

Clinton,  Governor  George: 

Mest^age  to  Legislature  calling  attention  to  importance  of  edu- 
cation        49 

Opposed  to  adoption  of  the  United  States  constitution 23 

Clinton,  Sir  Henry: 

Attainted   in    1779 25 

Clocks : 

Tariff  act  of  1787  imposed  a  duty  of  twenty  shillings 20 

To  he  assessed  at  forty  dollars  value  by  assessors  in  1799.  ...      IG 
Coaches : 

Tariff  act  of  1787  imposed  a  duty  of  fifteen  pounds 20 

To  be  assessed  at  eight  hundred  dollars  value  by  assessors  in 

1799   16 

Coffee: 

Tariff  act  of  1787  imposed  a  duty  of  one  penny 19 

Colden,  Daniel: 

Attained  in   1779 25 

CoUes,  Christopher: 

Proposed  a  plan  for  New  York  City's  water  supply \'VJ 

Colonial  assembly: 

Established  Church  of  England  ministry  in  1093  in  the  City 
of  New  York  and  counties  of  Queens,  Richmond  and  West- 
chester        161 

Established  in  1683 9 

Made  distinction  Ijetween  tax  rates  on  real  estate  and  personal 
property  in  1778 18 

Petition  to  the  governor  in  regard  to  assessment  of  property.  .      12 
Colonial  taxation: 

Chapter  1 3-2(5 

Colorerl  men : 

Suffrage  requirements  of Td 

Commondage : 

Land  held  in  common  in  D\itch  villages  in  New  Netherland  .  .    0,7 
Common  school  fund  : 

Created  in   180.')  from  sale  of  State's  public  lands 55 

Connecticut : 

Discrimination  against,  in  tariff  act  of  1878 21.     22 

Conservation  commission : 

Created   in   1911 98 

Reports  that  New  York  has  more  water  power  than  any  other 
state lOfi 


Index  283 

Controller:  Page 

Financial   officer  of   the   State 91 

Control  of  land  adjacent  to  improvements: 

A  reason  for  excess  condemnation 207 

Cooper,  William: 

Purchaser  of  public  lands  from  the  State 39 

Cordage : 

Tariff  act  of  1787  imposed  a  duty  of  four  shillings 19 

Corporation  taxes: 

First  imposed  in    1880 74 

Coulter,  Ernest  K. : 

Testimony  as  to  congested  districts  of  a  city 245 

Council  of  appointment : 

Instituted  under  constitution  of   1777 90 

Council  of  farms  and  markets: 

Created  in   1917 95 

Council  of  revision: 

Kevised  all  bills  passed  by  the  Legislature 90 

Court  fines: 

Divided  between  city,  officer,  church  and  poor  in  New  Amster- 
dam            4 

Court  of  Appeals: 

Constituted  by  the  constitution  of  1846 92 

Court  of  Claims: 

Changed  from  Board  of  Claims  in  1897 92 

Cows : 

To  be  assessed  at   four   to  ten  dollars  value   bj-   assessors   in 

1799   16 

Craig,  City  Comptroller  Charles  L. : 

Reported  New  York  City's  constitutional  debt  limit  January  1. 

1918 13.T 

Crooked  Lake  canal : 

Abandoned   in    1877    62 

Authorized  by  the  Legislature  in  1829 29 

Croton  aqueduct: 

Constructed  from  Croton  river  to  New  York  City 141 

Cruger,  John  Harris,  member*  of  the  council  of  the  Colony  of  New 
York : 

Attainted   in   1779 25 

C'urrants: 

Tarriff  Act  of  1787  imposed  a  duty  of  one  penny 19 

Cuyler.  Abraham  C,  Mayor  of  the  city  of  Albany: 

Attainted   in   1779 25 

Dallas,  Alexander  James: 

Recommended  income  tax  in  1815 264 


284  Index 

DeLancey,  James:  Page 

Attainted   in   1779 25 

(Jonliscated  property  in  New  York  City  sold 26 

Del^ancey,   Oliver,  member   of   the  council  of   the   Colony   of  Xew 
York: 

Attainted   in   1771) 25 

Delaware  and  Hudson  canal : 

Abandoned  in  1899 194 

DePeyster,  Johannes: 

Contribution  for  putting  New  Amsterdam  in  a  state  of  defense.       9 
Dix.  Governor  Jolm  Alden  : 

Recommendation  as 'to  use  of  the  State's  water  power 105 

Dogs: 

Injurious  to  the  sheep  industry 71 

Drugs : 

Tariff  Act  of  1787  imposed  a  duty  of  five  pounds 21 

DuBois,  Peter: 

Attainted   in   1779 25 

Duer,  Delegate  John : 

Of  constitutional  convention  of  1821  in  regard  to  lotteries.  ...      42 
Dutch  West  India  Companj': 

Presented  New  Amsterdam  with  its  first  city  hall 148 

Duties: 

Table  of  amount  of 8 

Early  sources  of  State  revenue: 

Chapter  III    37-46 

Earthern  ware: 

Tariff  act  of   1787  imposed   a   duty  of  seven   pounds   and  ten 

■shillings 20 

Edwards,  Delegate  Ogden : 

Of  constitutional  convcnlinn  of  1S21  in  regard  to  lotteries.  ...      42 
Elevated  railroads: 

Gross  earnings  tax  first  imposed  in  1896 76 

Encyclopedia  Americana: 

States  that  anthracite  coal  supply  of  country  will  be  exhauslcd 

in  50  years 110 

Engineer  and   Surveyor: 

Report  of  1858  contained  a  railroad  maj)  of  the  State 127 

England : 

Unearned  increment  tax  on  land  introduced  in  1909 253 

First  country  to  adopt  income  taxation 261 

English   language: 

To  be  taught  in  pulilic  schools  according  to  Act  of  1795 50 

Erie  canal: 

Construction  began  in  1817 28 

Enlargement  of,  in  1835 30 

To  be  changed  to  a  barge  canal 65 


Index  285 

Eric  railroad:  Page 

Borrowed  $3,000,000  from  vState  for  construction S2 

Excess  condemnation: 

Is  of  American  origin 210 

Made  constitutional  by  voters  of  the  State  in  1913 207 

Excise  department : 

Created  in  189tj 92 

Excise: 

Table  of  amount  of   8 

Exemptions : 

Chapter  XII    182-196 

Farmers : 

Would  lie  ruined  by  single  tax  on  land  values 228 

Figs: 

Tariir  act  of  1787  imposed  a  duty  of  one  penny 19 

Fillebrown,  Charles  B. : 

Author  of  "  The  A.  B.  C.  of  Single  Tax  " 218 

Firemen : 

Exemptions  in  reference  to 192.  193 

Flagg,  State  Comptroller  Azariah  Cutting: 

Report  concerning  State's  borrowing  capacity 34.     o'i 

Flax: 

Amount  raised  in  New  York  State  in  1845 115 

Flick.  Alexander  Clarence: 

Estimate  of  amoimt  realized  from  sale  of  confiscated  loyalist 

property 26 

Flour : 

Barrel  of,  could  be  transported   from  Cayuga  to  ^Montreal  for 

$1.50   in    1816 28 

Flour  of  mustard: 

TarilT  act  of  1787  imposed  a  duty  of  live  pounds 21 

Floyd.  Richard: 

Attainted  in   1779' 2(i 

Folliot,  Richard,  merchant  of  the  city  of  New  Vi.rk: 

Attainted   in    1 779 25 

Ford.  Henry: 

Manufacturer   of  jiutDinobih's 257 

Frying  pans: 

Tariir  act  of  1787  imposed  a  duty  of  live  pounds 21 

Fur  trade: 

Engaged  in  by    first  .settlers  of  \(>w  Xetlierland (> 

Gaynor,  Mayor  William  Jay: 

Criticized  Mortgage  Tax   Law  in    I'tlO Sfi 

General   training  day: 

Aboli.shcd   in    1S70 60 


28(J  Index 

(Jenesee  Valley  canal:  Page 

Abandoned  in   1878 63 

Authorized  by  the  Legislature  in  18;36 30 

George,  Henry : 

Dedicated  book,  "Protection  and  Free  Trade,"  to  Physiocrats.    212 

Stated  that  tramp  came  with  the  locomotive 10 

German  land  reform  league: 

Advocated  unearned  increment  tax  on  land 251 

Gewerbesteuer : 

Business  taxes  of  Prussia 85 

Glasgow,  city  of: 

Demolished  slum  area  thru  excess  condemnation 210 

Glassware : 

Tariff  act   of    1787   imposed  a  duty  of  seven  pounds  and   ten 

shillings 20 

Granger,  Gideon : 

Donated  1,000  acres  of  land  to  aid  in  the  construction  of  the 

Erie  canal  29 

Great  remonstrance: 

Complaint  sent  to  Holland  in   1649  by  prominent  inhabitants 

of  New  Amsterdam   47 

Greenwood  cemetery: 

Exempted  from  taxation   in   1838 189 

Groote  borgerrecht: 

Greater  right  of  citizenship 5 

Haig,  Professor  Robert  Murray: 

Heport    concerning   exemption    of   buildings   from   taxation    in 

Western  Canada  236 

Hair  powder : 

Tariff  act  of  1787  imposed  a  duty  of  four  pence 19 

Hamilton,  Alexander: 

Answered  objections  to  taxation  article  of  United  States  con- 
stitution     23,     24 

Hamilton    manufacturing   society: 

Exempted  from  taxation  for  a  period  of  five  years  in  1801  ....    120 
Hats: 

Tariff  act  of   1787   imposed  a  duty  of  seven   pounds   and   Ion 

shillings 21 

Hawkins,  Thomas  J.: 

Chief   assessor   of   Pittsburg 235 

Heere  Gracht: 

The  grand  canal  of  New  Amsterdam 6.  135 

Herkimer,  John  .Toost: 

Attainted    in    1779 25 

Highway  department: 

Created   in    1909 100 


Index  287 

Hill,  Governor  David  Bennett :  Page 

Message  concerning  New  York  City's  constitutional  debt  limit.    133 
Hoche,  General: 

Threatened  invasion  of  England 261 

Hoft'man,  Judge  Murray: 

Name  attached  to  Hoffman-Neill  rule  of  realty  valuation.  ...    167 
Holland  Land  Company: 

Donated   100,623  acres  of  land  to  aid  in  the  construction  of 

the  Erie  canal 29 

Horn  combs: 

Tariff  act  of   1787   imposed  a  duty  of  seven  pounds   and  ten 

shillings • 20 

Horse  harness: 

Tariff  act  of  1787   imposed  a  duty  of  seven  pounds   and  ten 

shillings 20 

Horses : 

To  be  assessed  at  eight  to  thirty  dollars  value  by  assessors  in 

1799 16 

Hospitals : 

Exempted  from  taxation 190 

Houses  of  industry: 

Exempted  from  taxation  in  182S' 194 

Huddleston,  William: 

First  English  schoolmaster  in  New  York  colony 58 

Hugo,  Victor: 

Advocated  the  distribution  of  sewage  upon  the  land 116 

Hunter,  Governor  Robert: 

Proposal  in  regard  to  quit  rents 7 

Hurley,  town  of: 

Division  of  commons  among  the  freeholders  by  act  of  Legis- 
lature in  1806 7 

Imprisonment  for  debt: 

Abolished    in    1831 71 

Income  taxes: 

Chapter  XVIl   261-275 

Indians: 

Exempted  from  taxation  189 

Treaties   with    8 

Indirect  sources: 

Revenue  of  New  Netherland  came  almost   exclusively  f roin .  .  .        3 
Industrial  commission : 

Came  into  being  in   1915 93 

Inglia,  Margaret,  wife  of  Reverend  Charles  Inglis: 

Attainted   in   1779 25 

Inglis,  Reverend  Charles,  rector  of  Trinity  church.  New  York  City: 

Attainted    in    1779 *.  .      25 


288  Index 

Inheritance  taxes:  Page 

Developed  out  of  probate  duties 81 

First  imposed  in   1885 79 

Theory  as  to  capitalized  income  tax 81 

Insurance  companies: 

Taxed  upon  their  gross  premiums 76 

Interborough   Rapid   Transit  Company: 

Constructed  subways  in  New  York  City  in  conjunction  with 

city 145 

Internal  improvements: 

Chapter  II   27-36 

Investment  taxes: 

A  new  name  for  secured  debt  taxes 87 

Jay,  John: 

Opinion  as  to  proper  method  of  taxation 266 

Jauncey,  James,  merchant  of  the  city  of  New  York: 

Attainted   in   1779.  '. 25 

Jessup,  Ebenezer: 

Attainted  in   1779 25 

Jessup,  Edward: 

Attainted    in    1 779 25 

Johnson,  Guy: 

Attainted   in    1779 25 

Johnson,  Sir  John : 

Attainted   in    1779 25 

Johnson,  Thomas  L. : 

Candidate  for  Governor  of  Ohio  in  1905 228 

Jones,  Thomas,   justice  of  the   Supreme  Court   of   the  colony   of 
New  York : 

Attainted   in    1779 25 

Kane,  John : 

Attainted   in   1779 25 

Kempe,  John  Tabor,  attorijey-general  of  ihc  Colony  of  New  York: 

Attainted   in    1779 25 

Seized  property  of  Johaniiis  ?klu(ls  as  an  escheat  io  Ihc  crown 

of  Great  Britain   50 

Kernan,  John  D. : 

Spoke  at  first  State  lax  conference  on  the  taxation  of  manu- 
factures       129 

Kiauchau.  China: 

First  application  of  taxation  of  unearned  increment  of  land.  .    251 
King.  Road  Commissioner  Samuel: 

Summoned  Bank  of  Ithaca  to  work  on  highways  in  1833 73, 

Kings  College: 

Founded  by  the  English  administration 48 

Kingston: 

J-.eads  in  per  capita  consumption  of  water Ill 


Index  289 

Kip,  Hendrick:  Page 

Contribution  for  putting  New  Amsterdam  in  a  state  of  defense.        8 
Klignerecht,  also  calletl  porterrecht : 

Lesser  right  of  citizenship •"> 

Kissam,  Daniel,  the  elder: 

Attainted   in   1779 25 

Laissez-faire  period  of  Xew  York  history: 

Chapter  IV    fiO-72 

Leake.  Rol)ert : 

Attainted    in    1779 2.5 

Leather : 

Tariff  act  of  1787  imposed  a  duty  of  three  and  four  pence.  ...      19 
Leonidas : 

Defender  of  the  Pass  of  Thermopyla; 224 

Lincoln,  Charles  Zebina : 

Stated  that  canals  were  a  loss  to  the  State  of  over  .$34,000,000.      ti.1 
Linseed  oil : 

Tariff  act   of   1787   imposed  a  duty  of  eight  pence 19 

Light,  water  and  power  companies: 

Taxed  upon  their  earnings  and  dividends 76 

Literary  and  charitable  institutions : 

Exempted  from  taxation  in  1829 194 

Liquors,  distilled: 

Tariff  act  of  1787  imposed  a  duty  of  four  pence 18 

Liquor  taxes: 

First  imposed  as  a  State  tax  in  1896 82 

Lloyd.  Henry,  merchant  of  the  State  of  Massachusetts  Bay: 

Attainted   in   1779 26 

Lloyd-George.  David : 

Characterization  of  income  tax  in  England 263 

London,  city  of: 

Demolished  shun  area  through  excess  condemnation 210 

Lotteries: 

A  means  of  raising  revenue  for  the  State 40-42 

Low.  Isaac,  merchant  of  the  city  of  New  York: 

Attainted    in    1779 2;i 

Ludlow.  Gabriel : 

Attainted    in    1779 2.') 

Ludlow,  George  Duncan.  .Tustice  of  the  Supreme  Court  of  the  Colony 
of  New  York: 

Attainted   in   1 779 ■2r> 

Macomb's  Purchase: 

The  largest  sale  of  public  land  in  the  State 38 

Madison  Square  park: 

Formerly  Potter's  Field  of  New  York  City 14:^ 

Malt : 

Tariff  act  of  1787  imposed  a  duty  of  four  pence 10 

10 


290  Index 

Maiilialtaii   Company:  Pagk 

Supplied  New  York  City  with  water  from  1799  to  1842 l.'JO,  140 

Manufacturing  industry : 

Value  of  its  product  surpassed  tliat  of  agriculture  in  the  State 

by    1870    60 

Marcy,  Governor  William  Learned: 

Messages  to  Legislature  relating  to  payment  of  State  debt .  .  30,     31 
Marling.  Alfred  E.: 

Testified  as  to  condition  of  Greater  New  York's  real  estate.  .  .    15« 
Marsiiall,  Chief  Justice  John: 

Decision  of  MeCulloch  versus  Maryland 184 

-Matthews,  David,  Mayor  of  the  city  of  New  Y^ork: 

Attainted   in   1779 25 

Maxwell,  William  H.: 

Report  as  to  New  Y'ork  City's  public  schools 147 

McAdam,  William,  merchant  of  the  city  of  New  York : 

Attainted   in    1779 25 

McCoun,  Vice  Chancellor  William  T. : 

First  to  use  so-called  Hoffman-Neill  rule  for  realty  valuation.    167 
Megalopensis,  Domine  Johannes: 

Contribution  for  putting  New  Amsterdam  in  a  state  of  defense.        9 
Merrill,   State  Tax  Commissioner  John  Jacob: 

Testified  regarding  amount  of  personal  property  in  State....    153 
Merritt,  William : 

Lessee  of  Brooklyn  ferry  in   1682 6 

Metropolitan  sewage  commission: 

Estimate  of  manurial  value  of  sewage 115 

Report  as  to  condition  of  New  York  City's  sewers 150 

Military  tract: 

Public  lands  in  the  center  of  the  State  to  pay  bounties  to  the 

soldiers  of  the  Revolutionary  War 38 

Militaiy  training: 

Known  as  general  training  day 08.     69 

(Jovernor  William  Henry  Seward  referred  to  it  in  his  message 

of  1840   69 

:\Iiller.  Cyrus  C: 

Testimony  as  to  sale  of  Bronx  property 221 

^liiuiit,  Peter: 

I'urchased  Manhattan  Island  from  the  Indians 222 

Mitchell,  C.  R.: 

Report  as  to  operation  of  unearned   increment  tax  on  land   in 

All)erta 255 

Molasses: 

TariflF  act  of  1787  imposed  a  duty  of  one  penny IS 

Money  system  for  working  highways: 

iVrmanentlv  established  in  State  in  1908 101 


Index  l^'Ji 

Morrison,  Malcom:  Page 

Attainted  in  1779 25 

Morris,  Mary,  wife  of  Roger  Morris: 

Attainted  in  1779 26 

Morris,  Koger,  member  of  the  council  of  the  Colony  of  New  York : 

Attainted   in    1779 25 

Mortgage  taxes: 

First  imposed  in   1905 85 

Morton,  Governor  Levi  Parsons: 

Recommendation  in  1895  as  to  disposition  of  tlie  Onondaga  salt 

springs 44 

Motor  vehicle  taxes: 

One-half  of  receipts  go  to  State  and  one-half  to  localities.  ...      88 
Muirson,  George: 

Attainted   in    1779 26 

Mules : 

To  be  asses.sed  at  $8  to  $35  value  by  assessors  in  1779 16 

Murray,  John,  earl  of  Dunmore,  formerly  governor  of  the  Colony  of 
New  York: 

Attainted  in  1779  24 

Mutts,  Johannis: 

Gave  his  lands  for  the  establishment  of  a  free  school 59 

National  banks: 

Taxed  on  their  capital  stock,  surplus  and  luidivided  profits.  ...      77 
National  Guard: 

Organized  in   1861 OS 

Neill,  Henry  Harmon : 

W  orked  out  table  for  Hoffman-Neill  rule 167 

New  activities  of  the  State: 

Chapter   VITI    105-1  1 9 

New  Amsterdam : 

Revenues  of    4 

Traders  at    5 

New  Castle,  town  of: 

Broken  dam  to  be  repaired   in   1677 9 

New  Jersey: 

Discrimination   a<:ains<.   in   Tarifl'  Act   of   1787 20.     21 

New  Netherland: 

Colonial   revenue   of    3 

Trade  colony    6 

New  sources  of  State  reventie: 

Chapter  VI    73-88 

New  York  and  Harlem  Railroad : 

\^■as  (he  first  horse  car  line 144.   145 

New  York  Central  and  Hudson  River  Railroad: 

Land  cost    in   1882 .  229 


292  Index 

New  York  Central  Railroad:  '  Page 

Allowed  to  carry  freight  in  1836 33 

New  York  Gas  Light  Company: 

Furnished  gas  light  to  certain  streets  of  New  York  City   in 

1823 142 

New  York  Tax  Reform  Association: 

Report  as  to  interest  rates  as  affected  by  mortgage  tax  law. .     86 
New  York  State: 

Under  two  governments  during  the  Revolutionary  War 17 

Nolan,  John: 

Address  concerning   industrial   housing 242 

Odell,  Governor  Benjamin  Barker: 

Opinion  expressed  in  message  as  to  operation  of  special  fran- 
chise tax  law 180 

Ohio: 

Wrested  agricultural  supremacy  from  New  York  in  1880 fiO 

Olives: 

Tariflf  act   of   1787   imjiosed   a   duty  of  seven   poiuids  and  ten 

shillings ' 20 

Olney,  Richard: 

Argued  constitutionality  of  income  tax  before  Supreme  Court.    26;) 
Oneida  Lake  canal : 

Abandoned  in   1 887 62 

Onondaga  salt  springs : 

Acquired  by  the  State  in  170.") 42 

Disposed   of   in    1898 44 

Orange  County: 

Taxpayers  required  to  furnish  assessors  with  a  just  arrcunt  nf 

their  property  in  1770   1  ."lO.   1  .")7 

Organization  taxes  on  corporations: 

First   imposed   in   1886 7.) 

Oswego  County : 

Aren  of  swamp  land  largest  in  State 113 

Oxen : 

To  be  assessed  at  ^la  value  by  assessors  in  1790 16 

Pacific  Mail  Steamship  Company: 

Case  decided  by  Court  of  Appeals  in  1876 105 

Paris : 

Began  utilizing  sewage  upon  the  land  in  1867 116 

Parsonages : 

Exempted  from  taxation  in   1802 ISO 

Parton.  James: 

Author  of  a  "  Life  of  John  Jacob  Astor  " 222 

Patroons: 

Curtailment  of  the  privileges  of 6 

Quit    rents    of g 


Index  -9-^ 

Peddleio"  liceuse  lax:  i'AGii 

Imposed   in   colonial   days -lo 

Pension  property: 

KxemjJled  from  taxation  in  IS'JU 190 

Penwell,  Lewis: 

Estimate  of  the  government's  need  of  wool 71 

Pepper : 

Tarifl"  act  of  1787  imi^osed  a  duty  of  three  pence ID 

Personal  property: 

Fixed  value  of  various  classes  of  for  taxation  purposes  as  de- 
termined by  the  Legislature  in  1779 15 

Three  times  as  much  in  the  State  as  there  is  real  estate.  .  .  .153.  15-1 
Pewter  ware: 

Tarifl"  act   of   1787   imposed  a   duty  of   seven  pounds  and  ten 

shillings " 20 

Phaetons  or  coaches : 

To  be  assessed  at  $300  value  by  assessors  in  1799 16 

Phillipse,  Frederick: 

Attainted  in   1779 25 

Physiocrats : 

French  school  of  thinkers  who  favored  a  single  tax  on  land.  .  .  .    212 
Pierson.  Josiah  G. : 

Loaned  £4.000  by  State  in  1795 27 

Pittsford  cemetery: 

Exempted  from  taxation  in  1843 189 

Pitt,  William: 

Introduced  income  tax  act  in  England 261 

Place.  John  A.: 

Report  as  canal  auditor  in  1882 63.     64 

Pork: 

Tariff  act  of  1787  imposed  a  duty  of  five  pounds 21 

Porterrecht.  also  called  klingnercht : 

Lesser  right   of  citizenship 5 

Porter : 

Tariff  act  of  1787  imposed  a  duty  of  si.x  pence 19 

Potts,  Rufus  M.: 

Discussed  fire  insurance  in  1914  annual  report 117 

Pratt  and  Logan: 

Developed  Pine  Hills  section  of  the  City  of  Albany 224 

Prendergast,  City  Comptroller  William  A.: 

Testified  as  to  Xew  York  City's  pension  system 151 

Prospect  park : 

Scene  of  battle  between  British  and   Americans,  August   27. 

1776 144 

Prunes: 

TaritT  ;i<i  nf  1787  imposed  a  duly  of  one  penny 19 


294  Index 

Public  education:  Pagk 

Chapter  IV    47-59 

Public  school  society  of  New  York  City: 

Founded  in  1805  for  poor  children  of  city 02 

Public  Service  Commisfiions : 

Organized  in   1907 97 

Quadrennial  assessment  of  property: 

Recommended  by  Wisconsin  State  Tax  Commission 158 

Queensboro  bridge: 

Second  longest  bridge  in  the  world 143 

Quills : 

Tariff  act   of   1787   imposed  a  duty  of  seven  pounds  and  ten 

shillings 20 

Quit  rents: 

Act  relative  to,  passed  in  1819 38 

Never  developed  into  a  distinct  land  tax 7 

Table  of  amount  of S 

Racing  taxes: 

Repealed  in  1910   84 

Raisins: 

Tariff  act  of  1787  imposed  a  duty  of  eight  pence 19 

Rampo  Water  Company: 

Proposed  supplying  Greater  New  York  with  water  in  1899.  ...    141 
Rapalje,  John: 

Attainted  in  1779 26 

Rapid  Transit  Commission : 

Testimony   taken   in    1895 221 

Rate  bill  system: 

In  vogue  in  public  schools  until  1867 'I'^-r):^ 

Benefit  theory  of  taxation 267 

Re-plotting  of  remnants  and  irregular  building  lots: 

A  reason  for  excess  condemnation 208 

Reserve  militia: 

Consisted   of  all  male  citizens  between  the  ages  of  IS  and  45 
not  members  of  the  imiformed  militia (iS 

To  participate  in  the  general  tra^ining  day  the  first  ^Monday  of 

September  of  each  year .  . '. 68 

Robinson,  Beverly: 

Attainted  in  1779 25 

Robinson.  Oovernor  Lucius: 

Recommendation  for  the  abolishment  of  Ihe  banking  and  insin- 

ance  departments   72 

Robinson.  Susannah,  wife  of  Beverly  Robinson: 

Attainted   in   1779 25 

Rochester,  town  of: 

Inhabitants  exempted  from  taxation  in   1781  on  account  of  a 
late  incursion  of  the  enemy 186.  187 


Index  295 

Roelantsen,  Adam:  Page 

First  Dutch  achoolmaster  in  New  Amsterdam 47 

Roosevelt,  John  and  Nicholas : 

Purchasers  of  public  lands  from  the  State :)!> 

Ruggles,  Judge  Charles  H. : 

Decision   upholding   special   assessments 20(1 

Ruggles,  Samuel  B.: 

Plan  for  enlargement  of  Erie  canal 34 

Saddles : 

Tariff  act  of  1787  imposed  a  duty  of  ten  shillings 20 

Saddle  trees: 

Tariff  act  of  1787  imposed  a  duty  of  twelve  shillings 20 

Sale  of  public  lands : 

Amounted  to  about  50  per  cent,  of  State  revenue  in  (!arly  days.      :i7 

Disposed  of  very  lavishly , 39 

Sales : 

Represents  the  testimony  of  both  purchaser  and   seller  as  to 

value   of   property  conveyed ." 170 

Salt: 

Bounty  for  exportation  of  Avithout  the  State 43 

Tariff  act  of  1787  imposed  a  duty  of  six  pence 19 

Sanford,  Samuel : 

Made  a  careful  study  of  the  coal  supply  of  this  country 110 

vSaving   in   expense  to  the  municipality   through   sale  of   abutting 
property  at  increased  values  due  to  the  improvement : 

A  reason  for  excess  condemnation 200 

Savings  banks: 

Deposits  in  exempted  from  taxation  in   lSr)7 77.   190 

Taxed  on  their  surplus  and  undivided  pi'ofits 77 

School  trustees: 

Duties  of  prior  to  1867 53.     54 

Schepen : 

Fine  for  tardiness  and   absence 4 

Sshout : 

Fine  for  tardiness  and  absence 4 

Schut,  Cornelius: 

Used  city  hall  as  a  .storehouse  for  salt 140 

Scythes : 

Tariff  act  of  1687  imposed  a  duty  of  twelve  shillings 20 

Seaman.  Benjamin: 

Attainted   in    1770 25 

Secretary  of  State: 

Custodian  of  the  State  archives 91 

Secured  debt  taxes: 

First   imposed   in    1011 87 


'2[)6  Index 

Seligman,  Professor  Edwin  Robert  Anderson:  Paoe 

Characterization  of  general  property  taxes 'J72,  2T,i 

Definition  of  a  f ranc-liise 78 

Seward,  Governor  William  Henry: 

Message  concerning  militia  system  in  1S40 69 

Seymour,  Governor  Horatio: 

Recommended  State  care  for  the  insane 97 

Seymour.  State  Engineer  and  Surveyor  Silas: 

Report  of  1883  that  the  canals  must  go (io 

Sheep : 

Exempted   from  taxation   in    1789 187 

Molested  by  dogs 71 

Sherbrook,  Miles,  merchant  of  the  city  of  New  York: 

Attainted  in   1 779 25 

Sherman,  Isaac: 

Favored  a  single  tax  on  land 220 

Sherman,  Senator  John: 

Opposed  repeal  of  federal  income  tax  law  in  1870 267 

Shoes : 

Tariff  act  of  1787  imposed  a  duty  of  six  pence  to  one  shilling.  .      20 
Shovels : 

Tariff  act  of  1787  imposed  a  duty  of  five  pounds 21 

Sidmouth,  Lord: 

Prime  minister  of  England 202 

Simmons,  Delegate  George  A. : 

Of  constitutional  convention  of  1846  in  regard  to  the  English 

language    50 

Skeene,  Andrew  P. : 

Attainted   in   1779 25 

Skeene,  Philip: 

Attainted  in   1779 25 

Slaves : 

To  l)e  assessed   at    one  hundred  dollars  value   l)v  assessors   in 

1779   IG 

Sloops : 

To   be   assessed    at    seven    huiulicd    and    fifty   dollars   value   by 

assessors  in    1779 16 

Smith,  Melancton : 

Estimate  of  revenue  received  fioni  (arilT  ;ict  of  1787 22.     23 

Smith,  Sydney : 

Description   of   iMighnul's   indirect    system  of  taxation 262 

Snuff: 

Tariff  act  of  1787  imposed  a  duty  of  six  pence 19 

Snyder.  \V.  P..  aiiditor  general   of  Pennsylvania: 

Condition  of  Pennsvlvania  from  1830  to  1853 r;4 


IXDEX  29 


Soap:  Pack 

Tariff  act  of  1787  imposed  a  duty  of  five  pounds 21 

Society  for  lowering  rents: 

Advocated  luitaxing  buildings 2:52 

Society  for  the  propagation  of  the  gospel  in  foreign  parts : 

Established  English  schools  iii  the  New  York  colony 48 

Presented  New  York  City  with  1,642  books  for  its  first  library.    147 
Somers,  William  A.: 

Originator  of  a  unit  system  of  realty  valuation 165 

Special  assessments: 

Chapter  XIII 107-211 

Stallions: 

To  be  assessed  at  three  hundred  dollars  value  by  assessors  in 

1799   '. 16 

State  aid  to  railroads: 

Solicited    under   pretext    of    developing   the    resources    of    the 

State    32 

State  banks : 

Taxed  on  their  capital  stock,  surplus  and  undivided  profits.  ...      77 
State  expenditures: 

Chapter    VII 89-104 

State's  fiscal  year: 

Changes  made  as  to  time  of 69 

State  tax  rates: 

Highest  in  history  of  State  in  1872 66 

Steamboat  taxes: 

To  aid  in  the  construction  of  the  Erie  canal 45 

Steel : 

Tariff  act  of  1787  imposed  a  duty  of  three  farthings 19 

Stirrup  irons : 

Tariff  act   of   1787   impo.sed  a   duty  of  seven  pounds  and   ten 

shillings    20 

Slock  transfer  taxes: 

First  imposed  in  1905 84 

Stop  and  tax  law: 

Enacted  in  1842 34 

Stoutenburg.  J. : 

Supplied  lighting  to  ^"ew  York  City  in   1770 142 

Suffrage : 

Requirements  of 70 

Sugar  beets: 

Bounty  to  encourage  production  of  sugar  from 71 

Sugar: 

Tariff  ad  of  1787  imposed  a  duty  of  half  pence  to  two  pence.        19 
Superiniendent  of  banks: 

Created  in  1851 102 


298  Index 

Superintendent  of  insurance:  Page 

Created  in   1800 102 

Superintendent   of  State  prisons: 

Office  created  in  1876 m 

Supreme  court : 

Constituted  by  colonial  assembly   in    1G91 '••2 

Surface  street  railroads: 

Gross  earnings  tax  first  imposed  in  1S9G 76 

Surveyor  general : 

Existed  under  the  colony  of  New  Netlierland it9 

Surveyor  of  the  king's  woods: 

Existed  from  1698  to  1777 99 

Swine : 

To  be  assessed  at  three  dollars  value  by  assessors  in  179!V 16 

Tariff: 

Act  of  1784  exempted  from  duties  goods  and  merchandise 
imported  into  New  York  from  any  of  the  other  original 
thirteen    states 18 

Act  of  1 787 1 8-21 

Taxation : 

First   taxes  in  New  Netherland  were  largely  of  a    voluntary 

nature   8 

Tax  department: 

Continuation  of  State  board  of  assessors 94 

Taxing  manufacturing  companies: 

Chapter   IX 120-131 

Tea: 

TarilT  act  of  1787  imposed  a  duty  of  three  to  eight  pence.  ...      19 
Tea  water  pump: 

Its  water  most  esteemed  in  New  York  City l.'?9 

Telephone  and  telegraph  companies: 

Gross  earnings  tax  first  imposed  in  1881 76 

The  condition  of  New  York  City: 

Chapter  X 1 :52-l T)") 

The  fallacy  of  the  single  tax : 

Chapter  XIV 212-2:?! 

Throop,  Governor  Enos  Thompson : 

Message  concerning  imprisonment  for  debt  in   IS.'il 71 

Tilden,  Governor  Samuel  Jones: 

Message  in  187G  recommending  retrenchment  in  canal  manage- 
ment    64.     65 

Tobacco : 

Tariff  act  of  1787  imposed  a  duty  of  three  pence 19 

Toll  gates : 

Last  one  disappeared  in  State  in   191;") Iflf) 


Index  290 

Townsliip  hiw  for  i)ul)lif  sthonls:  1'agk 

Enacted  in  1917 56 

Repealed  in   1018 57 

Transportation  companies : 

Gross  earnings  tax  first  imposed  in  1880 7.").     76 

Trust  companies : 

Taxed  on  their  capital  stock,  surplus  and  undivided  profits.  ...      77 
Tryon,  William,  late  governor  of  the  colony  of  New  York: 

Attainted   in    1 779 24 

Tsvine : 

Tariff  act  of  1787  imposed  a  duty  of  five  pounds 21 

Ulster  County: 

New  tax  levy  in  17G4  owing  to  defalcation  of  collector- 14 

Unearned  increment: 

Chapter  XVI 2.-)il-26n 

Union  College: 

Received  revenue  from  lotteries 41.     42 

United  States  census: 

To  be  used  by  assessors  as  a  basis  for  assessing  real  estate  in 

1799 : 15 

United  States  geological  survey: 

Began  a  topographical  map  of  New  York  in  1892 100 

United  States  surplus: 

Distributed  among  the  states  in  1836 5.") 

University  of  the  State  of  New  York: 

Created  in   1 784 95 

Untaxed  buildings: 

Chapter    -W 232-249 

Vancouver : 

Effects  of  exemption  of  buildings   from  taxation  .  .   234 

Tax  arrears 249 

Van  Dam,  Rip: 

Lessee  of  Brooklyn  ferry  in   1699 138 

Van  Steenwyck.  Cornelius: 

Contribution  for  putting  Now  Amsterdam  in  a  state  nf  defense.        8 
Van  Tienhoven,  Secretary  Cornelius: 

Contribution  for  putting  New  Amsterdam  in  a  state  of  defence.        9 

Revenue  of  Colony  nf  New  Nethorland   in   l(5.'iO  3 

Vestrymen : 

Acted  as  assessors  of  property  in  New  York  City  1(51 

Oath  taken  in  1721  on  assessing  property 172.   173 

Voltaire: 

Author  of  essay,  "The  Man  of  Forty  Crown-  '"  21' 

von    Dederich.   .\dniiral   Otto: 

Instituted   taxation   of  unearned  increment   of   land    in    Kian 
thau.  China 2.'>0 


300  IXDEX 

Voorlezer :  Page 

Reader  in  Dutch  churches 47 

Voor  Sanger : 

Precenter  in  Dutch  churches 47 

Wade,  F.  C. : 

Analyzed  building  permits  in  Vancouver 238 

Wallace.  Alexander,  merchant  of  the  city  of  New  York : 

Attainted  in   1779 2") 

Wallace,  Hugh,  member  of  the  council  of  the  colony  of  New  York: 

Attainted  in   1779 ■2:^ 

Warner's  observatory  of  Rochester: 

Exempted   from  taxation  in   1886 191 

Washington,  George: 

Saw  in  1783  the  advantage  of  a  water  communication  between 

the  Hudson  River  and  the  great  lakes 28 

Watches : 

To  be  assessed  at  twelve  to  fifty  dollars  value  by  assessors  in 

1799 * 16 

Watts,  John,  member  of  the  council  of  the  colony  of  New  York : 

Attainted   in   1779 25 

Westfield  cemetery : 

Exempted  from  taxation  in   1 846 180 

West  India  company: 

Charter  of 6 

Wetherhead.  John,  merchant  of  the  city  of  New  York: 

Attainted   in   1779 25 

White,  Henry,  member  of  the  council  of  the  colony  of  New  York : 

Attainted  in   1779 25 

White,  Thomas,  merchant  of  the  city  of  New  York : 

Attainted  in   1779 25 

Whitman,  Governor  Charles  Seymour: 

Recommended  production  of  nitrogen  from  the  atmosphere.  ...    112 
Wickham,  Parker : 

Attainted   in   1779 25 

Wild  animals: 

Bounties  for  destruction  of 70.     71 

Wllgus,  William  J.: 

Testimony  as  to  amount  of  freight  trucked  in  New  York  City.    137 
Willcmsen,  Hendrick: 

Opposition  to  special  assessment  in  1659 199 

Wine: 

Excise  on 3 

TarifT  act  of  1787  imposed  a  duty  of  four  to  eight  pence 18 


Index  301 

Wisconsin:  Page 

Adopted  a  State  income  tax  in  1910 274 

State  tax  commission  presented  reasons  for  quadrennial  assess- 
ment of  property .' 158 

Woman  suflTrage: 

Adopted  by  amendment  to  constitution  in  1917 70 

Wood,  ilayor  Fernando: 

Message  to  the  common  council  of  New  York  City  in  1861 ...  .    132 

Wright,  Carroll  D. : 

Comment  on  growth  of  manufacturing  in  the  United  States..    125 


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